Does the pilot free trade zone promote “quality improvement and quantity increase” of the city’s export trade?

Tao Zou, Shasha Li and Yixin Dai

Economic Analysis and Policy, 2025, vol. 87, issue C, 1323-1341

Abstract: The Pilot Free Trade Zone (PFTZ) is an important strategic initiative for China to promote high-level opening up to the outside world, push forward the high-quality development of trade, and accelerate the construction of a strong trade country in the new era. Based on the panel data of 281 cities in China from 2007 to 2019, we use the multi-period DID model to study the impact of the establishment of PFTZ on the “quality improvement and quantity increase” of the city’s export trade and its mechanism. The findings indicate that the establishment of PFTZ can significantly promote the “quality improvement and quantity increase” of the city’s export trade, and the conclusion still holds true after a series of robustness tests. The results of the mechanism test show that the establishment of PFTZ mainly promotes the “quality improvement and quantity increase” of the city’s export trade through increasing trade openness, facilitating economic agglomeration, and enhancing innovation levels. Heterogeneity analysis shows that the establishment of PFTZ has a more significant effect in inland regions, central and western regions, and cities with lower levels of economic development, less developed digital economies, and a lower degree of marketization. Simultaneously, the establishment of PFTZ has a more pronounced effect on improving the quality of export products in larger cities, but it significantly promotes the expansion of export trade scale in smaller cities to a greater extent. Therefore, we suggest accelerating the construction process of PFTZ, implementing the strategy of upgrading PFTZ, and exploring the differentiated institutional innovation measures of PFTZ, so as to promote the “quality improvement and quantity increase” of the city’s export trade.

Keywords: Pilot free trade zone; Export trade; Quality improvement and quantity increase; Multi-period DID model (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:1323-1341

DOI: 10.1016/j.eap.2025.07.011

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