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Trade policy and industrial policy in China: What motivates public authorities to apply restrictions on exports?

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  • Gourdon, Julien
  • Monjon, Stéphanie
  • Poncet, Sandra

Abstract

This paper investigates the motives behind China's fiscal policy targeting exports. It relies on detailed data at the product level over the period 2002–2012. We analyze two major export fiscal instruments: export tax and export VAT rebate. Our results suggest that while pursuing many objectives simultaneously, Chinese policy used the two instruments in a complementary way with the aim of achieving their industrial policy and strategic objectives. Some are officially stated objectives such as promoting technology or environmental protection, while others do not appear in official documents, such as subsidizing downstream sectors. We also observed that China managed these instruments dynamically to address temporary shocks, for example to temper rising food price or to support strategic sectors sensitive to price competitiveness in the middle of the financial crisis.

Suggested Citation

  • Gourdon, Julien & Monjon, Stéphanie & Poncet, Sandra, 2016. "Trade policy and industrial policy in China: What motivates public authorities to apply restrictions on exports?," China Economic Review, Elsevier, vol. 40(C), pages 105-120.
  • Handle: RePEc:eee:chieco:v:40:y:2016:i:c:p:105-120 DOI: 10.1016/j.chieco.2016.06.004
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    References listed on IDEAS

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    Cited by:

    1. Mario Cimoli & Jose Antonio Ocampo & Gabriel Porcile, 2017. "Choosing sides in the trilemma: international financial cycles and structural change in developing economies," LEM Papers Series 2017/26, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Wang Zhenhua & Zhang Guangsheng, 2016. "Industrial policy, production efficiency improvement and the Chinese county economic growth," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 34(2), pages 505-528.

    More about this item

    Keywords

    Trade policy; industrial policy; China; VAT system; export tax;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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