Input-Trade Liberalization And The Technology Choice,Product Quality And Markups Of Chinese Manufacturing Firms

In order to increase the degree of opening to the whole world and join in the world multilateral trade system,China became the official member of the world trade organization(WTO)in 2001.After joining the world trade organization,China has reduced the tariff substantially in the period of 2002-2005 and reduced the tariff slightly in the period of 2005-2010.In 2010,China has totally achieved the commitments about tariff reduction.In fact,China has reduced the tariff of key intermediate goods,which will have a great significance on the behaviors and performance of chinese manufacturing firms.With this exogenous policy,it is meaningful to discuss the effect of input-trade liberlization on the behaviors and performance of chinese manufacturing firms.Using the new-new trade theory and considering the special situation of China,this article researches the the effect of input-trade liberlization on the technology choice,product quality and markups of chinese manufacturing enterprises by constructing theoretical and emprical models.Different from the majority of related references,this paper focus on the input-trade liberlization.The main conclusions are in the following:Fristly,the input-trade liberalization has only accelerated China's manufacturing export firms with middle range productivity to adopt high technology.This effect of input-trade liberalization on the firm's technology is heterogeneous across firms and depends on their initial productivity level.Other conclusions are that the effects on technology-intensive exporting frirms are the most strongest while the effects on labor-intensive exporting enterprises are not significant.Secondly,based on chinese highly detailed tariff data,customs data and chinese industrial enterprise data,the empirical results show that the relationshiop between China's input-tariff and the quality of export products is a nonlinear U type after joining the WTO.Considering the mechanism analysis,we find that the input-trade liberalization can affect the quality of export products through the cost channel and competitive Channel.Through the analysis of the direction and strength of the two channels,we can successfully explain why the relationshiop between China's input-tariff arnd the quality of export products is a nonlinear U type after China's entry into WTO.The similar conclutions can also be found between China's input-tariff and the markups.