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Processing Trade, Tariff Reductions and Firm Productivity: Evidence from Chinese Firms

In: Input Trade Liberalization in China

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  • Miaojie Yu

    (National School of Development, Peking University)

Abstract

This article explores how reductions in tariffs on imported inputs and final goods affect the productivity of large Chinese trading firms, with the special tariff treatment that processing firms receive on imported inputs. Firm-level input and output tariffs are constructed. Both types of tariff reductions have positive impacts on productivity that are weaker as firms’ share of processing imports grows. The impact of input tariff reductions on productivity improvement, overall, is weaker than that of output tariff reductions, although the opposite is true for non-processing firms only. Both tariff reductions are found to contribute at least 14.5% to economy-wide productivity growth.

Suggested Citation

  • Miaojie Yu, 2023. "Processing Trade, Tariff Reductions and Firm Productivity: Evidence from Chinese Firms," Contributions to Economics, in: Input Trade Liberalization in China, pages 87-140, Springer.
    • Handle: RePEc:spr:conchp:978-981-99-7599-0_5
    DOI: 10.1007/978-981-99-7599-0_5
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