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A Fragmented China

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  • Sandra Poncet

    ()
    (Faculty of Economics, Erasmus Universiteit Rotterdam)

Abstract

This paper studies the degree of integration of China's domestic market and investigates the determinants of inter-provincial trade barriers under the rubric endogenoustrade policy theory. I rely on industry-level trade flows extracted from provincial input-output tables to develop a model that analyzes the magnitude and evolution of Chineseprovinces' engagement in domestic trade by computing all-inclusive indicators of tradebarriers. Results underline that over the 1990s, not only was China's domestic marketfragmentation along provincial borders great, but it also has become more severe atleast between 1992 and 1997. The investigation of province-level and industry-leveltrade barriers confirms the relevance of applying the framework of endogenous protection to explain the level of impediments to trade between Chinese provinces. Findingsemphasize that provinces' domestic trade protection pursues a dual objective of socioeconomic stability preservation and fiscal revenues maximization.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-103/2.

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Date of creation: 22 Sep 2004
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Handle: RePEc:dgr:uvatin:20040103

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Related research

Keywords: International Economics: Economic Orders; Economic Integration and Globalization; General; Country and Industry Studies of Trade; Economic Integration; Economywide Country Studies: Europe; Regional Governmental Analysis: Regional Development Policy;

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Citations

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Cited by:
  1. Herrmann-Pillath, Carsten & Libman, Alexander & Xiaofan, Yu, 2010. "State and market integration in China: A spatial econometrics approach to 'local protectionism'," Frankfurt School - Working Paper Series 137, Frankfurt School of Finance and Management.
  2. Hering, Laura & Poncet, Sandra, 2009. "The impact of economic geography on wages: Disentangling the channels of influence," China Economic Review, Elsevier, vol. 20(1), pages 1-14, March.
  3. Guriev, Sergei & Yakovlev, Evgeny & Zhuravskaya, Ekaterina, 2010. "Interest group politics in a federation," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 730-748, October.
  4. Dilip Mookherjee & Pranab Bardhan, 2005. "Decentralization, Corruption And Government Accountability: An Overview," Boston University - Department of Economics - Working Papers Series, Boston University - Department of Economics WP2005-023, Boston University - Department of Economics, revised Jun 2005.
  5. Evgeny Yakovlev & Ekaterina Zhuravskaya, 2006. "State Capture in a Federation," Working Papers w0093, Center for Economic and Financial Research (CEFIR).
  6. Sergei Guriev & Evgeny Yakovlev & Ekaterina Zhuravskaya, 2007. "Inter-Regional Trade and Lobbying," Working Papers w0100, Center for Economic and Financial Research (CEFIR).
  7. Chen, Shimin & Sun, Zheng & Tang, Song & Wu, Donghui, 2011. "Government intervention and investment efficiency: Evidence from China," Journal of Corporate Finance, Elsevier, Elsevier, vol. 17(2), pages 259-271, April.

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