China’s Miracle in Foreign Trade

Description

This book mainly focuses on the miracle of China’s foreign trade in the past 40 years from five perspectives: first, it briefly reviews the import substitution strategy China adopted before its opening-up; second, it analyzes the export-oriented strategy that contributes a lot to China’s economic growth since 1980s; third, it discusses the impacts of trade liberalization and China’s participation in WTO on Chinese firms; forth, it addresses the deepening opening-up in the context of global financial crisis; last, it provides policy advice on China’s newly conducted all-around opening-up strategy. By dividing China’s opening-up into five stages, this book offers a comprehensive discussion to understand and analyze the reason, performance and challenge of China’s economic growth from the perspective of foreign trade. Preface Contents List of Figures List of Tables Part I Overview 1 China’s Opening-Up Policies: Achievements and Prospects 1.1 Introduction 1.2 Expanding the Extensive Margin of Opening, 1978–2000 1.2.1 Setting Up Open Economic Zones and Industrial Parks 1.2.2 Relaxing Market Access for Foreign Direct Investment 1.2.3 Reducing Import Tariffs 1.2.4 Encouraging the Processing Trade 1.2.5 Comments on the Stage of Extensive-Margin Opening 1.3 Focusing on the Intensive Margin of Opening, 2001–2017 1.3.1 Accession to the WTO 1.3.2 Expanding Market Access for FDI 1.3.3 Relaxation of Outward FDI 1.3.4 Establishment of Pilot Free Trade Zones 1.3.5 New-Economy Pilot Cities Experiment 1.3.6 Comments on the Stage of Intensive Margin of Opening Up 1.4 Features of the All-Around Opening Up 1.4.1 Belt and Road Initiative 1.4.2 Free Trade Ports Experiment 1.4.3 Greater Bay Area 1.4.4 Policy Recommendations 1.5 Conclusion Part II Import Substitution and Trade Protection 2 The Economics of Price Scissors: An Empirical Investigation for China 2.1 Introduction 2.2 Price Scissors in China 2.3 The Theoretical Framework 2.4 The Econometric Model 2.4.1 Agricultural Trade 2.4.2 Relative Agricultural Price Elasticity of Wage 2.5 Data and Empirical Results 2.5.1 Benchmark Estimates 2.5.2 Endogeneity and Instruments 2.5.3 Robustness Checks 2.5.4 Identification of the Weights 2.6 Concluding Remarks Appendix 3 Measuring the Impact of Trade Protection on Industrial Production Size 3.1 Introduction 3.2 The Empirical Model 3.3 Data and Estimate Results 3.4 Concluding Remarks Part III Export-Led and Firm Productivity 4 China’s Processing Trade: A Firm-Level Analysis 4.1 Introduction 4.2 Policy Setting to Promote Processing Trade 4.2.1 The Characteristics of Processing Trade 4.2.2 The Origin of Processing Imports 4.2.3 Top Products of Processing Imports 4.3 Transportation Modes 4.3.1 The Most Important Ports 4.3.2 The Most Strongly Demanded Locations 4.3.3 Quality of Processing Imports 4.3.4 Ownership of Processing Importing Firms 4.3.5 The Scope of Activity Conducted by Import Processing Firms 4.4 Matching Transaction-Level Trade Data and Firm-Level Production Data 4.4.1 Transaction-Level Trade Dataset 4.4.2 Firm-Level Production Dataset 4.4.3 Matching Method 4.4.4 Productivity for Processing Firms 4.5 Conclusions 5 Estimating Productivity Using Chinese Data: Methods, Challenges and Results 5.1 Introduction 5.2 Model 5.3 Estimation 5.3.1 First Stage 5.3.2 Second Stage 5.3.3 Extensions: Over-Identification and Attrition 5.4 Data and Empirical Implementation 5.5 Results Using Cobb–Douglas 5.6 Results Using Translog 5.7 Measures of Within-Industry Productivity Dispersion 5.8 Assessing Differences in Estimated Productivity—Economic Metrics 5.8.1 Capital-Intensity and Productivity 5.8.2 Sales and Productivity 5.8.3 Exporting and Productivity 5.9 Conclusions Appendix 5.1: Cobb–Douglas Point Estimates 6 Place-Based Industrial Policy and Firm Productivity 6.1 Introduction 6.2 Data and Measurement 6.2.1 Data 6.2.2 Measurement 6.3 Empirical Strategy and Results 6.3.1 Baseline Model 6.3.2 Robustness Check 6.3.3 Placebo Test 6.3.4 Endogeneity 6.3.5 Mechanisms 6.3.6 Spillovers 6.4 Concluding Remarks 7 Managerial Efficiency and Product Decision: Evidence from Chinese Firms 7.1 Introduction 7.2 Preliminary Empirical Analysis 7.2.1 Estimation Framework and Measures 7.2.2 Data 7.2.3 Estimates 7.2.4 Role of Firm Heterogeneity in Productivity 7.2.5 Endogeneity Issues 7.2.6 Summary and Issues 7.3 Theoretical Model and Analysis 7.3.1 Technologies 7.3.2 Product Markets 7.3.3 Firm’s Decision 7.3.4 Market Equilibrium 7.3.5 Trade Liberalization 7.3.6 Firm Heterogeneity in Production Productivity 7.4 Further Empirical Analysis: The Role of Managerial Efficiency 7.4.1 Measure of Managerial Efficiency 7.4.2 Measure of Productive Efficiency 7.4.3 Estimates with Heterogeneous Managerial Efficiency 7.4.4 Further Robustness Checks 7.5 Concluding Remarks Appendix 7.1: Matching Transaction-Level Trade Data and Firm-Level Production Data Transaction-Level Trade Dataset Firm-Level Production Dataset Matching Method Appendix 7.2: Proof of Proposition 1 Appendix 7.3: Measuring Pure Productive Efficiency (TFP2) Part IV Trade Liberalization Strategy 8 Measured Skill Premia and Input Trade Liberalization: Evidence from Chinese Firms 8.1 Introduction 8.2 Data, Measures, and Empirics 8.2.1 Data 8.2.2 Measures 8.2.3 Mincer Empirical Specification 8.3 Estimation Results 8.3.1 Baseline Mincer Regressions 8.3.2 Mincer Regressions Using Matched Sample 8.3.3 Estimates Using Panel Data 8.3.4 Endogeneity Issues 8.3.5 On the Possible Mechanism 8.4 Conclusion Remarks Appendix 8.1: Estimates Using Alternative Measured Unskilled Wages (Online Only, Not for Publication) 9 Input Trade Liberalization and Import Switching: Evidence from Chinese Firms 9.1 Introduction 9.2 Data and Measurement 9.3 Empirical Findings 9.4 Conclusions Part V All-Round Opening-up Strategy 10 Worker Training, Firm Productivity, and Trade Liberalization: Evidence from Chinese Firms 10.1 Introduction 10.2 Data 10.3 Empirical Specification 10.3.1 Type-2 Tobit Selection Model 10.4 Estimation Results 10.4.1 Baseline Results 10.4.2 Self-Selection of Training 10.4.3 Different Measures of TFP 10.4.4 Further Robustness Checks 10.5 Concluding Remarks Appendix A 11 China’s Free Trade Ports: Effective Action Against the Threat of De-Globalization 11.1 Introduction 11.2 Theoretical Framework for the Establishment of Free Trade Ports 11.2.1 New De-Globalization Threat to the World Trade 11.2.2 Free Trade Ports: The Next Step in China’s Reform and Opening up 11.2.3 Functional Orientation for the Construction of China’s Free Trade Ports 11.3 International Experience and Domestic Exploration 11.3.1 Singapore Port 11.3.2 Shanghai Yangshan Free Trade Port Area 11.3.3 Comparison Between the Shanghai Free Trade Port and International Free Trade Ports 11.4 Path for the Construction of Free Trade Ports in China 12 Forty Years of Opening Up Has Greatly Benefited China’s Foreign Trade 12.1 The Remarkable Achievements of Chinese Foreign Trade 12.2 From a Wider and Deeper to an All-Around Opening Up Over Four Decades 12.3 Key Practices of Reform and Opening Up During the Past Four Decades 12.3.1 From the Import Substitution Strategy to an Export-Oriented Strategy 12.3.2 Trade Liberalization and WTO’s Influence 12.3.3 Opening Up Deeper Amid the Global Financial Crisis 12.4 Policy Suggestions for the All-Around Opening Up Strategy References