A Fragmented China. Measure and Determinants of Chinese Domestic Market Disintegration
This paper studies the degree of integration of China’s domestic market and investigates the determinants of inter-provincial trade barriers in light of endogenous trade policy theory. I rely on a new set of provincial trade ows to develop a model which analyzes the magnitude and evolution of Chinese provinces’ engagement in domestic trade by computing all-inclusive indicators of trade barriers. Results underline that not only the Chinese domestic economy is fragmented but also that local protectionism has spread between 1992 and 1997. The investigation of province-level and industry-level trade barriers confirms the relevance of applying the framework of endogenous protection to explain the level of impediments to trade between Chinese provinces. Our findings emphasize that provinces’domestic trade protection pursues a dual objective of socio-economic stability preservation and fiscal revenues maximization.
|Date of creation:||2002|
|Publication status:||Published in Review of International Economics, 2005, pages 409-430|
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