Title: Endogenous Trade Policy in a Global Value Chain: Evidence from Chinese Micro-level Processing Trade
Presented by: Zhi Yu
Time and Date: 10:30-12:00, Friday, December 22nd, 2017
Venue: Room 102, 3rd Teaching Building
This paper examines endogenous trade policy in a global value chain by exploring the impact of exports of intermediate inputs of a country on its trade barriers on final products. We use Chinese transaction-level processing trade data and finds that, the more are a country’s intermediate exports to China, the lower is the trade barrier this country imposes on the imports of the final product from China produced with these intermediates. The reason is that a low trade barrier on the final product increases the country’s demand for Chinese final product, and thus increases Chinese demand for its intermediate inputs used in the production of that product. This impact exists for both the permanent tariffs (preferential and MFN tariffs) and temporary trade barriers (TTB, including anti-dumping and safeguards), is stronger for differentiated products than for commodities, and is stronger when intermediate export industries are more organized. For MFN tariffs and safeguards applied to all trade partners, this impact is higher when the share of a country imports of the final product from China (out of its total imports from the whole world) is higher, which implies it’s more likely that the MFN tariffs and safeguards are set mainly against China.
Zhi Yu is an Associate Professor at the Shanghai University of Finance and Economics and a member of “Shanghai Pujiang Scholar Program”. He is also a Research Associate at the China (Shanghai) Free Trade Zone Research Collaboration Center and the U.S. Federal Reserve Bank of Dallas. He received his PhD in Finance from Renmin University of China and PhD in Economics from Georgetown University, and once worked at China’s National Commission of Development and Planning (former National Commission of Development and Reform), the Research Department at the Monetary Fund, and the US Census Bureau at the Department of Commerce. His research focuses on micro-level studies of international trade policy. His papers and articles were published in academic journals such as Journal of International Economics and Developments in Economics (Chinese), as well as Chinese newspapers such as China Securities and Financial Times.