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Estimating the Repercussions from China’s Export VAT Rebate Policy

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, Université de Clermont-Ferrand)

  • Laura Hering

    (Erasmus University Rotterdam)

  • Stéphanie Monjon

    (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Sandra Poncet

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

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 2003-2012 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 percent decline in the export VAT tax leads to a 7.2 percent 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 Monjon & Sandra Poncet, 2022. "Estimating the Repercussions from China’s Export VAT Rebate Policy," Post-Print hal-03274542, HAL.
    • Handle: RePEc:hal:journl:hal-03274542
    DOI: 10.1111/sjoe.12453
    Note: View the original document on HAL open archive server: https://uca.hal.science/hal-03274542v1
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    Cited by:

    1. Zhang, Teng & Xu, Shu & Zhang, Shuoxun, 2022. "Are export tax rebates patronage for Chinese firms? An analysis of productivity," China Economic Review, Elsevier, vol. 75(C).

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