A Study On The Influence Of U.S. Non-Tariff Measures On China Export Binary Margins

The 40 years of reform and opening-up is an important period during which China's foreign trade has achieved leap-forward development.China adhered to opening-up policy and fully participated economic globalization,and achieved rapid development in foreign trade,which has become an important force for stimulating economic growth,promoting supply-side structural reforms,promoting employment,and preventing risks.However,the outbreak of the global financial crisis in 2008 and the sluggish international demand caused China's export trade to decline by 13.9% in 2009.After 2010,although the growth rate of foreign exports has gradually recovered,it has not reached pre-crisis level.Since 2018,The trade friction between China and the United States has escalate which expose China's foreign trade development to a much more uncertain future.With the rise of global trade protectionism and the accumulation of external economic risks,China need to change the development of foreign trade from "high growth rate" to "high quality".From global trade policy trend,the level of tariffs is declining due to rapid growth free trade agreements,but the number of non-tariff measures is growing rapidly on a global scale,from “quantitative” measures to “standard-ownership” measures nowadays.The negative impact of non-tariff measures represented by technical trade barriers(TBT)and sanitary and phytosanitary inspection measures(SPS)on trade are increasing and affecting "quality improvement and efficiency improvement" of China's foreign trade.Therefore,it is necessary to study how non-tariff measures affect China's foreign trade development.In the context of the escalating trade friction between China and the United States,this dissertation mainly studies how the US non-tariff measures affect the binary margins of China's export enterprises and products.Limited by data and research methods,most of the research on non-tariff measures mainly analyzes its impact on a country's overall trade from a macro perspective.However,with the continuous development of international trade theory,number of studies on binary margins of trade from micro perspective are increasing.In the context of rising global trade protectionism and the escalating trade friction between China and the United States,This dissertation take the perspective of export enterprise and product binary margins and study the impact of U.S.non-tariff measures on the binary margins of Chinese exporters and export products through the analysis of U.S.non-tariff measures,literature review and theoretically modeling.This dissertation not only provides a new theoretical and empirical basis for the influencing factors of trade binary margins,but also provides a microscopic perspective for evaluating the impact of nontariff measures.The main conclusions of the dissertation are as follows: First,in terms of theoretical research,based on the new-new trade theory,this dissertation introduces non-tariff measures as the influencing factors into the binary margins of trade,and constructs the theoretical model of non-tariff measures and binary margins at enterprise level and the product level,which found that non-tariff measures increased the cost of enterprise,negatively affected the enterprise's entry,exports and product ownerships,while increased enterprise exiting probabilities.Second,from history perspective,nontariff measures have gone through various rounds of negotiations in the WTO,from the initial “quantitative” measures to the current “standard” measures.After the financial crisis,contemporary trade protective measures such as “anti-dumping” and “antivailing” investigations have become another important part of non-tariff measures;the United States implemented a large number of non-tariff measures against China,covering a wide range of products,which have present obvious industry and enterprise ownerships differences;binary margin decomposition of China's exports found that multi-product and multi-market enterprises are the main force for China's export growth and China's export growth is mainly achieved through the intensive margin.Third,import demand elasticity measurement and non-tariff measures quantification show that import demand elasticity and non-tariff measures have a significant positive relationship with GDP.The import demand elasticity and non-tariff measures are more restrictive in middle-high income countries and high-income countries.Import demand elasticity and non-tariff measures are more restrictive in agricultural product sector than in manufacturing sector.After 2003,the US non-tariff measures were more restrictive than tariffs,and then continued to increase.After the 2008 financial crisis,the growth had increased,indicating that actual US trade costs did not fall.Fourth,using multidimensional fixed-effect models to analyze Chinese export enterprises binary margins,empirical results show that US non-tariff measures significantly reduce the probability of Chinese enterprises entering the United States,significantly increase the probability of Chinese enterprises exiting the US market,and significantly reduce Chinese enterprises export.Dividing the regression samples by ownership,industry and region,the results reveal that foreign and private enterprises,medium and high-tech products industries and eastern region enterprises were greatly affected.Furthermore,dividing the sample into pre-financial crisis(2001-2007)and post-financial crisis(2008-2014),results show that U.S.non-tariff measures are highly restricted after the financial crisis.Fifth,product level regression show that U.S.non-tariff measures have significantly reduced the China export product types to U.S.,significantly increasing the price of Chinese export products to United States and improving the quality of Chinese export products to United States.Further,the samples were divided by enterprises ownership,industry and final use for heterogeneity analysis.The results showed that private enterprises,high-tech products and consumer goods were negatively affected.Further,the samples were divided into pre and post financial crisis,results show that non-tariff measures after the financial crisis are more restricted.Using Heckman two-step method,non-tariff measures lag term and the instrumental variable method,he empirical results of this dissertation remain robust.U.S.non-tariff measures substantially increase the cost of Chinese enterprises' exports and have different effects in terms of enterprises ownerships,industries,regions,final use.The empirical findings at the product level further expand the conclusions of existing literature.First,because U.S.import demand elasticity in most products is greater than that of China,increasing price of Chinese exports to United States will further lead to decrease in U.S.demand;Second,the US non-tariff measures should be viewed in an objective and comprehensive manner.Unlike tariff measures,non-tariff measures can improve the quality of certain products,which also contributes to China export products upgrading.Therefore,China needs to be vigilant to US non-tariff measures at the macro level,raise awareness,build a complete non-tariff measures early warning and information communication mechanism,and improve domestic standards and other related laws;at the micro level,effectively use the "forced" effect of U.S.non-tariff measures and improve the quality standards of related products,while strengthen the reform of state-owned enterprises and activate the vitality of private enterprises.The dissertation is divided into seven chapters: The introduction chapter consists of research background and main research problems and reviews the relevant research,defines related concepts while describes research ideas,contents and methods,summarizes the innovations and shortcomings.The second chapter is the theoretical basis of non-tariff measures on export binary marginal.Through the review of international trade theory,this dissertation analyzes the changes of trade policy,and propose the mechanism of non-tariff measures on enterprise and product binary margins.And constructing a theoretical model of non-tariff measures on exporting enterprises and products binary marginal.The third chapter analyzes the current status of U.S.nontariff measures and Chinese enterprises' exports.Brief describe global non-tariff measures status and focus on China and U.S.non-tariff measures.Analyzes binary margins of Chinese enterprises' exports and generally describes evidence of non-tariff measures and export binary margins.The forth chapter quantifies import demand elasticities and non-tariff measures.Using a more reasonable sample data and empirical models to re-calculate import demand elasticities.On this basis,the “quantity-based method” is used for quantifying various U.S.non-tariff measures in the form of advalorem equivalents(AVE)in order to build a more comprehensive U.S.non-tariff measures index.The fifth chapter is the first part of the empirical study of this dissertation.By constructing a multi-dimensional fixed-effect model,the dissertation studies the impact of U.S.non-tariff measures on the China's export enterprises binary margin,and further studies heterogeneity from different industries,enterprise ownership and regions.The sixth chapter is the second part of the empirical research.It starts from micro-product perspective and examines how the US non-tariff measures affect export products binary margin,including the numbers,prices and quality of export products,and further studies heterogeneity from different industries,enterprise ownership and product use.The seventh chapter is conclusions and policy recommendations.