Estimating the Repercussions from China’s Export VAT Rebate Policy

Julien Gourdon, Laura Hering, Stéphanie Monjon and Sandra Poncet ()

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: Our study shows that China's export value-added tax (VAT) rebate system is a major industrial policy that affects its exports. We use export data at the HS6 product level for a panel of 329 Chinese cities over the 2003-2012 period to assess how changes in the export VAT tax have affected China's export performance. We consider different trade margins in terms of volumes, prices, and the number of countries served. To counter endogeneity, we exploit variations in the expected impact of the export VAT rebates by trade regime, which come from an eligibility rule disqualifying certain export flows from the rebates. Our results suggest that a 1 percent decline in the export VAT tax leads to a 7.2 percent relative increase in eligible export values at the city level. This effect is due to an adjustment of quantities and the number of foreign markets served while the average unit values of exports remain unchanged.

Keywords: China; Export performance; Export tax; Policy evaluation; Trade elasticity; VAT system (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-cna, nep-int and nep-pbe
Note: View the original document on HAL open archive server: https://uca.hal.science/hal-03274542v1
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Published in Scandinavian Journal of Economics, 2022, 124 (1), pp.243-277. ⟨10.1111/sjoe.12453⟩

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Working Paper: Estimating the Repercussions from China’s Export VAT Rebate Policy (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-03274542

DOI: 10.1111/sjoe.12453

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