Trade Implications of China's Subsidies

Trade Implications of China's Subsidies
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Volume/Issue: Volume 2024 Issue 180
Publication date: August 2024
ISBN: 9798400282478
$20.00
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Exports and Imports , Economics- Macroeconomics , Export subsidies , Export prices , Imports , Exports , Trade balance , Global , China , Domestic subsidies , International trade , Spillovers , Overcapacity

Summary

Available data show a marked increase in subsidy utilization in China and in other major economies between 2009 and 2022. In this paper, we investigate the effects that China's subsidies have on international trade flows at the product level over this period. The results indicate that the subsidies promoted Chinese exports and limited imports. These effects have been magnified by supply-chain linkages: subsidies given to upstream industries expand significantly the exports of downstream industries. Additional analysis of the price and quantity effects at the product level shows that China's subsidies lowered export prices and boosted export quantities in certain sectors such as metal products, furniture and autos, but not in others such as electrical machinery where the evidence is more consistent with quality upgrading.