We have published two papers and completed one research paper under the project. The first paper provides a comprehensive analysis of the relationship between import activities and the quality of exports, using Chinese customs data for the manufacturing sector from 2000-2013. We improve upon existing analyses by estimating quality from the demand side and thus delivering quality estimates at the firm-product-destination level. We find that sourcing from abroad enhances the export quality and quality improvements are particularly strong when firms purchase inputs from high-income countries. These findings suggest that greater openness to trade in the form of expansion in import scale could not only stimulate the diffusion of the modern technologies embodied in imported inputs but also improve the quality of exported products. Policies directly aimed at restricting imports by increasing trade costs can indirectly harm the export performance of domestic firms. In contrast, policies that facilitate the inflows of foreign inputs are essential for contributing to growth.
The second paper provides a thorough description of AD activities in the period 1980-2015, with a focus on measures imposed on China by the EU and the US. We contribute to the existing literature by painting a complete picture of AD protection in the EU and the US to the period after the global financial crisis. We document a series of stylized facts, such as the growing focus on China, the concentration of AD duties in few sectors, and the increasing share of intermediate goods subject to such measures. Second, we reveal the historic all foreign use of AD against China's exports, moving from an aggregate level down to sectors and firms. We find that AD duties exert a negative effect on trade flows from China, with both the intensive and extensive trade margin contributing to the fall in export values. Moreover, in line with the previous literature, we find a strong reduction in export quantities and a small increase in the free on board price of products facing AD measures. In this respect, AD duties have achieved the goal of containing Chinese exports.
The third paper examines how temporary increases in export costs in one market affect firms’ export behavior across markets. For this purpose, we investigate how Chinese exporters respond to market-specific tariff shocks that arise when importers impose AD duties. By exploiting the time-varying trade policy changes from the Global Antidumping Database and transaction-level Chinese customs data between 2000-2015, we find that the use of contingent duties in one market leads to a severe reduction in export flows by Chinese firms serving that market. Additionally, the trade-restrictive AD measures are associated with little-to-no impact on prices, indicating that duties are most likely to pass through to importers completely. More importantly, the negative effect on trade transits through the product quality dimension. We furthermore consider the force that drives the declining quality: reduced export revenues prevented Chinese firms from buying more expensive and better quality foreign-made inputs, which in turn, deterred them from producing high-quality goods. Our paper highlights that the distortions in product quality, not just the trade that is subject to AD measures, should be taken into account when measuring the losses on exporters. We therefore contribute to the literature by exploring the quality channel through which AD shocks impact exporters, in addition to the well-documented effect on constraining trade flows.
