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An effective industrial policy tool in China
[Un outil de politique industrielle efficace en Chine]

Author

Listed:
  • Julien Gourdon

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

  • Laura Hering
  • Stéphanie Monjont
  • Sandra Poncet

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 2003-12 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% decline in the export VAT tax leads to a 7.2% 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.

Suggested Citation

  • Julien Gourdon & Laura Hering & Stéphanie Monjont & Sandra Poncet, 2021. "An effective industrial policy tool in China [Un outil de politique industrielle efficace en Chine]," Post-Print hal-03509578, HAL.
    • Handle: RePEc:hal:journl:hal-03509578
    Note: View the original document on HAL open archive server: https://uca.hal.science/hal-03509578
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    More about this item

    Keywords

    système de TVA; évaluation des politiques; taxe aux exportations; performance des exportations; élasticité au commerce; Chine;
    All these keywords.

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