Green Product Exports, Domestic Value Added and Trade Policies: Firm-Level Evidence from China

Hiau Looi Kee, Daria Taglioni and Enze Xie

No 11240, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the roles of tariff and non-tariff measures in China’s meteoric rise as the world’s leading green product supplier. Evidence from customs transaction data from 2000 to 2016 shows that processing firms propelled the export surge, utilizing the expanding domestic material varieties due to trade liberalization benefiting their upstream suppliers. The substitution of domestic materials for imported materials raised the domestic value-added ratio of the processing firms and the exports of green products. A two-sector model rationalizes the empirical results. Trade policy liberalization, together with industrial policies, market scale, and synchronized global demand, contributed to China’s dominance.

Date: 2025-10-23
New Economics Papers: this item is included in nep-bec, nep-cna, nep-env, nep-int and nep-sea
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