The Research On Trade Policy Distortions And China's Trade Benefits Of Virtual Water Import

In the past several decades,China's extensive pattern of trade development has been questioned by many scholars.On one hand China could not dynamically and effectively optimize the actual trade benefits due to the inertia of trade policy making,on the other hand the traditional pattern of trade development is not sustainable because it brings both low added value and high consumption of the energy.Recently,China s construction of the new economic system has entered a very important"Reaching the Standard" period.Guaranteeing the quality of trade development and improving bilateral trade benefits are the primary tasks to be solved in China's economic development.As the traditional statistical caliber can not fully reflect a country's trade benefits in participating in economic globalization,the concept of"Virtual Water Trade" emerges at a historic moment."Virtual water" refers to the water resources that must be consumed in the production of goods and services.As the name suggests,the "Virtual Water Trade Theory" mainly examines the transnational flow of water instead of goods in international trade,and argues that countries with scarce water resources should import commodities that intensively use water resources to alleviate the current situation of water resources scarcity.At the same time,countries with abundant water resources export products that intensively use water resources,thereby optimizing the distribution efficiency of water resources worldwide.How to optimize the trade benefits of China's bilateral virtual water import has become an urgent problem to be solved.If we can integrate the strategic objective of optimizing the trade benefits of virtual water import with our existing trade policy system,it will lay a foundation for avoiding trade friction between countries and forming strategic advantages of water resources for China.However,it is undeniable that the benefits of virtual water trade under free trade situation is still uncertain,and different kinds of trade policy distortions in reality may result in the overestimation or underestimation of the benefits of virtual water import in China at present.How to identify the benefits of bilateral virtual water import under the influence of China's current trade policy distortions?In recent years,has China's trade policy distortion index system positively promoted or negatively suppressed the benefits of China's bilateral virtual water import?In order to answer the questions above,this paper provides a comprehensive measure of China's current trade policy distortions'level and structure.To study the level of trade policy distortions faced by China's bilateral trade accurately,this paper uses the Trade Restrictiveness Index to systematically depict the different types of trade policy distortions.The trade policy distortion indicators include the non-tariff trade barriers imposed by China on import trade,the tariff trade barriers encountered by China's bilateral import and export,and a series of trade policy distortions caused by preferential trade agreements.Since non-tariff barriers take different forms,such as quotas,involuntary licences,anti-dumping,technical barriers,etc.This paper first transforms all types of non-tariff barriers into ad valorem tariff equivalents that can be compared with tariff barriers.After that,based on the method of Trade Restrictiveness Index,this paper constructs two kinds of "Absolute Trade Policy Distortion Indexes" repectively considering only tariff trade barriers and considering both non-tariff trade barrmers and tariff trade barrmers.In order to investigate the possible distortion of preferential trade agreements,this paper also constructs the "Relative Trade Policy Distortion Index",and then completes the construction of the evaluation system of the trade policy distortion in this paper.This paper consists of eight chapters.Its basic structure and main contents are as follows:Chapter 1 is the introduction,which mainly introduces the background,research significance,research ideas,research content,methods and innovations and deficiencies of this paper.Chapter 2 is the literature review,which mainly includes three parts.One is related research on trade policy distortions,the other is related research on virtual water trade benefits,and the third is related research on different kinds of trade policy distortions affecting virtual water trade benefits.Chapter 3 is the measurement and analysis of trade policy distortions and China's bilateral virtual water trade.Firstly,based on the Tade Restriction Index theory,this chapter constructed and measured China's Trade Policy Distortion Index System.Then,based on the input-output method,China's bilateral virtual water is measured accordingly Chapter 4 is the theoretical analysis on trade policy distortions affecting the trade benefits of virtual water import trade.Based on the theoretical model constructed by Eaton and Kortum(2002).,this chapter analyzes trade policy distortions' influential mechanism on the trade benefits of China's bilateral virtual water import.Chapter 5 to the Chapter 7 empirically examines the comprehensive effects of trade policy distortions on trade benefits of China's bilateral virtual water import at three levels,i.e trade direction,trade flow and trade structure effects of China's bilateral virtual water import trade under trade policy distortions.Chapter 8 is the conclusion,policy recommendations and research prospects of this paperThis paper draws the following conclusions through theoretical empirical analysis,marginal analysis,input-output analysis and comprehensive application of various measurement methodsFirstly,the results show that the absolute trade policy distortions in China declines more significantly in 2001-2005 than in 2000,and increased slightly after the financial crisis.In the meanwhile the relative trade policy distortion index in China did not decline significantly year by year,and even fluctuated more obviously around 2008.The results of this paper also show that there are great differences in the level of trade policy distortions adopted by China's trade policies towards different trading partners.In addition,China's bilateral virtual water trade flow is huge and has broad prospects.China is a net importer of total virtual xwater.Among all kinds of virtual water trade,green virtual water trade accounts for the highest proportion of total virtual water trade in China.In some years,China's bilateral virtual water trade has a net outflow of grey virtual water.Thus,the environmental effects of grey virtual water export can not be ignored.Secondly,trade policy distortions caused by tariff trade barriers and ad valorem tariff equivalents of non-tariff trade barriers have negative restraining effects on the bilateral virtual water trade flow for importing countries.Unlike the general mechanism of trade policy distortions affecting commodity trade,trade policy not only directly distorts the flow,direction and structural changes of bilateral virtual water trade,but also affects the cost constraints of intermediate and intermediate compound through the industrial forward-backward relationship,which results in the indirect distorting effect of trade policy distortions.In addition,the change rate of the direct water consumption coefficient between importers and exporters of virtual water trade is also an important source of affecting the trade benefits in a country's virtual water import.Thirdly,without considering the distortion of trade policy,the deviation of China's bilateral virtual water import flow is more serious,and the existence of various trade policy distortion indicators can explain the above phenomenon separately.Among all the trade policy distortion indexes,the relative trade policy distortions index is the most obvious one which leads to the deviation of the flow direction of China's bilateral virtual water trade.In all industries,the virtual water trade flow of non-metallic mineral products industry and agriculture,forestry,animal husbandry and fishery in China is the least in line with theoretical expectations.Meanwhile,the virtual water trade flow of Health and Social Work Industry is the most significance in line with theoretical expectations.The loss of efficiency of China's bilateral virtual water import does exist,and all trade policy distortions index can explain the average loss of efficiency of China's total virtual water import by 17.4%-38%.Among all trade policy distortions,relative trade policy distortions have the greatest impact on the inefficiency of China's bilateral virtual water imports.Therefore,the trade policy distortions brought about by the signing of preferential trade agreements can not be ignored.In addition,the most efficient sources of bilateral virtual water imports in China mainly include countries with rich natural resources and countries and regions relatively which are close to China.In the meanwhile China needs to pay attention to improving the efficiency of virtual water imports from Turkey,Lithuania,Greece and other countries.Different kinds of trade policy distortions have significant effects on the upgrading of China's virtual water import trade structure:absolute trade policy distortions significantly inhibit the optimization and upgrading of China's virtual water import trade structure,while the current relative trade policy distortions formed by signing preferential trade agreements can promote the optimization and upgrading of China's virtual water import trade structure.The degree of industrial backward and forward linkages significantly enhances the role of trade policy distortions in upgrading the trade structure of bilateral virtual water imports in China.The academic contribution of this paper is to give a systematic answer to China's virtual water import trade benifits under trade policy distortions,and brings a new analytical framework to analyse the mechanism of how trade policy distortions affect China's virtual water import trade benefits.Another theoretical breakthrough of this paper lies in the comprehensive measurement of trade policy distortions based on Trade Restriction Index under a unified framework,which can enrich the relevant literature.The practical significance of this paper is to provide a theoretical evidence for future trade policy system constuction by interpreting the comprehensive effect of different kinds of trade policy distortions on the benefits of bilateral virtual water trade.