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How Did Free Trade Reshape the Transitional China? Evidence from Heterogeneous Exporters and Firm-Level Pollution Emissions

Ling-Yun He, Xi Lin and Qiren Liu

Emerging Markets Finance and Trade, 2020, vol. 56, issue 8, 1651-1676

Abstract: China’s economic development has entered a period of transformation. Does trade liberalization reshape transitional China? In this study, from the perspectives of heterogeneous exporters and firm-level pollution emissions, we employ the data of 372,861 samples from China’s manufacturing to empirically investigate the impacts of trade liberalization on China’s economic transformation. Our results indicate that both import and export liberalization significantly change the behaviors of Chinese exporters, and aggravates pollution emissions. The underlying mechanisms include scale, factor composition and technique effects by trade liberalization. In addition, trade liberalization has heterogeneous impacts on different types of firms, which refers to ownership reforms, manufacturing sector upgrades and regional-coordinated development that are the part of China’s economic transformation. Altogether, our findings provide important evidences on the impacts of trade liberalization on China’s economic transformation and firm-level pollution emissions.

Date: 2020
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DOI: 10.1080/1540496X.2019.1620101

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