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The impact of US–China trade war on Chinese firms: Evidence from stock market reactions

Author

Listed:
  • Xiaoquan Wang
  • Xinyue Wang
  • Zheng Zhong
  • Junnan Yao

Abstract

We study Chinese firms’ stock market reactions of US–China trade war. Using stock market returns of listed firms and corresponding firm-level export information from China Customs database, we find a negative effect of trade war that firms with higher proportion of prior export to US show more negative market reactions. This effect is strongest among firms with non-state ownership. Further evidences show that the negative impact largely comes from firms exposed directly to tariff increase.

Suggested Citation

  • Xiaoquan Wang & Xinyue Wang & Zheng Zhong & Junnan Yao, 2021. "The impact of US–China trade war on Chinese firms: Evidence from stock market reactions," Applied Economics Letters, Taylor & Francis Journals, vol. 28(7), pages 579-583, April.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:7:p:579-583
    DOI: 10.1080/13504851.2020.1764477
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    Cited by:

    1. Vuong, Giang Thi Huong & Nguyen, Manh Huu & Huynh, Anh Ngoc Quang, 2022. "Volatility spillovers from the Chinese stock market to the U.S. stock market: The role of the COVID-19 pandemic," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).
    2. Deev, Oleg & Lyócsa, Štefan & Výrost, Tomáš, 2022. "The looming crisis in the Chinese stock market? Left-tail exposure analysis of Chinese stocks to Evergrande," Finance Research Letters, Elsevier, vol. 49(C).
    3. Mohammed Bouaddi & Khouzeima Moutanabbir, 2022. "Systematic extreme potential gain and loss spillover across countries," Risk Management, Palgrave Macmillan, vol. 24(4), pages 327-366, December.
    4. Gu, Xin & Zhang, Weiqiang & Cheng, Sang, 2021. "How do investors in Chinese stock market react to external uncertainty? An event study to the Sino-US disputes," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).

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