Trade Liberalization and Productivity:Evidence from Chinese Firms

Yu Miaojie
(CCER, Peking University)

Abstract：China has experienced dramatic trade liberalization since the late 1990s. In this paper, I investigate the impact of trade liberalization on firm productivity by using both Chinese manufacturing firm-level data and highly disaggregated Chinese import data from 1998—2002 For this purpose, a firm's total factor productivity (TFP) was calculated by adopting an augmented Olley-Pakes (1996) semi-parametric methodology to correct the simultaneous bias from reverse causality and selection bias from the firms exit. After controlling the endogeneity issue, trade liberalization is found to significantly boost the firm's productivity. Moreover, the effects of trade liberalization on the firm's productivity in exporting firms are found to be smaller than that in non-exporting firms. One of the possible reasons is that, exporting firms with assembly, as a significant proportion of exporting firms in China, has no need to pay for imported materials. Accordingly, the ongoing tariff cut has only limited effect on these firms' productivity. However, such firms would still have other benefits like spillover for processing behavior. As a result, exporting firms on average have higher productivity than non-exporting firms. Such findings are robust to different measures of TFP.
Key Words：Trade Liberalization; Firm Productivity; Firm Exit; Chinese Firms
JEL Classification：F10, L10, O10, O20 

The Price Effect of Imported Goods on Urban Household Expenditure

Luo Zhi and Guo Xibao
(Center for Economic Development Research, Wuhan University)

Abstract：This paper analyses the price effect of imported goods on urban househ old expenditure.We first estimate the price effect of imported consumption goods and intermediate goods on domestic consumption goods. Then we use Chinese urban household consumption structure to calculate the price effect of imported goods on urban household expense. The results indicate the price effect of imported goods on domestic goods is significant, but it changes with the cost of trade. The price effects of imported good on domestic clothes, transport, medicine and electrical equipment are weak, but the effect on domestic food is much stronger.During 2000 to 2008,the rising price of imported good has a negative impact on the urban household expenditure, especially on the poor family.

Key Words： Imported Goods; Price Effect; Consumption
JEL Classification：D12, F10, R20