Public Health Emergency And Exports

The world is undergoing dramatic changes unseen for over a century,and the CO VID-19 pandemic can be an accelerator of these changes.As of the end of April 2022,two years after its outbreak,the global pandemic is still spreading worldwide.The number of confirmed cases of COVID-19 worldwide had amounted to 500 million,and the death toll had surpassed 6 million.Unlike the global public health crises in history,the Novel Coronavirus(2019-nCoV)changes more slowly than other viruses like HIV and features a lower fatality rate,which in turn results in its spread around the world.The COVID-19 pandemic is the most serious global pandemic of the past century.It is also a public health emergency with the fastest spread,the widest range of infections,and the most difficult to prevent and control since the founding of the People’s Republic of China.In the face of this pandemic,policymakers around the world had struggled to make a trade-off between economic growth and public health.Stringent containment policies may lead to huge economic losses,while loose containment policies may put the public at risk of infection.The Chinese government chose to put its people’s health first and implemented strict prevention and control policies at the outbreak of the 2019-nCoV.It only took about three months to contain the spread of the virus and prevented millions of lives from being infected,though the process was quite tough.On the other hand,however,strict containment policies had also caused dramatic economic losses,as well as a contraction in trade.Therefore,it is a crucial and urgent issue to scientifically evaluate the economic costs of these containment measures.The COVID-19 pandemic had not been under control in major economies such as the United States around the world,resulting in an increasing imported case of COVID-19.In addition,sporadic COVID-19 cases in China appeared occasionally and thus the prevention of domestic rebound of COVID-19 is under pressure.On the other hand,it is worth noting that policy evaluations play a key part in scientific and democratic decision-making.Besides,optimizing the ex-ante evaluation and ex-post evaluation systems of primary policies is also part of the CPC Central Committee’s proposals for the formulation of the 14th Five-Year Plan(20212025)for National Economic and Social Development and the Long-Range Objectives Through the Year 2035(hereinafter referred to as the Proposals).To capture the economic cost in prevention and control of the pandemic in a comprehensive,objective,and accurate manner,this article leverages the containment measures at different levels,i.e.,provincial,prefectural,and sectoral measures respectively,to examine the relationship between the public health emergency and international trade.This article has obtained the monthly customs data at the Harmonized System(HS)8-digit level by province and destinations from the General Administration of Customs,and aggregate exports by prefecture and destinations from local customs offices.The former dataset spans from January 2017 through December 2020,while the latter dataset spans from January 2017 through June 2020.In addition,we also obtained Chinese provincial containment measures from the Oxford COVID-19 Government Response Tracker(OxCGRT).Last but not the least,this paper employs difference-in-differences(DID),triple differences(DDD),instrumental variable(IV),and other tools of causal inference to examine the relationship between the containment measures and export growth.The main findings can be summarized as follows:First,stringent prevention and control policies had causally led to a decline in export growth rates,even though this effect is a short-run phenomenon.Second,cities with well-developed ICT infrastructure or a higher proportion of teleworkers were more resilient from the shocks and thus a smaller decline in export growth rates.Third,the supply chain disruptions resulting from the within-province containment measures,whose shocks propagated along with the upstream and downstream sectors,were the primary causes for the decline in exports.The negative effect caused by out-of-province downstream shocks is greater than that of out-of-province upstream shocks.Fourth,sectors relying heavily on imported intermediate inputs had experienced a larger decline in export growth in the face of the disruptions in global supply chains,while sectors with higher domestic contents were much more resilient.Specifically,in addition to the parts of Introduction and Literature Review,the main finding of this paper by three major chapters can be summarized as follows.Chapter 4 aims to assess the extent to which the provincial containment measures had impeded the export growth rates.This chapter uses the provincial containment measures,i.e.,Stringency Index,from the OxCGRT maintained by the Oxford University,and the monthly customs data at the HS 6-digit level by province-trading partners.The main findings of this chapter are,on average,that provincial containment policies are negatively associated with the growth rates of commodity exports,though this effect does not hold in the medium and long run.Heterogenous treatment effects are substantial across a battery of dimensions.In particular,the decline in the growth rate of exports under the general trade was large,while that of exports under the processing trade was negligible.The primary cause for this phenomenon can be that the estimated effect was attributed to the supply-side shocks caused by the containment measures,and demand-side shocks have been controlled through an extensive set of fixed effects.By comparing the seasonal differences in the effects of containment policies in 31 provinces,this article finds that,on average,the export-suppression effect of the stringent containment.measures was not only substantial but also common in capital goods,consumer goods,and intermediate goods.Beyond the average negative effect,significant differences in the treatment effects have been found in the four quarters of 2020.The export-suppression effect in the first quarter was dominant during the whole year.Although the estimated effects were also negative for the three other quarters,those estimates were statistically indistinguishable from zeros,except for capital goods.Chapter 5 targets to examine the impact of the city-level lockdown policies on export performance.The lockdown policies in Wuhan and other prefectures provide us with a quasi-experiment to leverage a difference-in-differences(DID)design to conduct this examination.This chapter uses confidential monthly trade data by origin citydestination markets from January 2018 to June 2020.The main finding is that,compared with non-lockdown cities in the control group,on average,lockdown cities witnessed a 34 percentage-point lower export growth rates,equating to about 3 million dollars.On the other hand,however,the export-suppression effect only existed in the short term,implying that the lockdown policies were cost-effective.In addition,the treatment effect of the lockdown policy shows strong heterogeneity.Coastal cities,cities with better ICT infrastructure,and cities with a higher proportion of people who can work at home are more resilient in their export growth rates.To enhance the causal inference,this paper also employs a DDD design and an Ⅳ approach with distance from Wuhan to instrument the lockdown policies,as well as a propensity score matching to alleviate the concern of selection problems.Chapter 6 will examine the impact of upstream and downstream shocks,which were attributed to the containment measures,from the province of interest or the other provinces on export growth at the HS 6-digit level.Using the 2012 Chinese multiregional input-output table at the 31 province level,the identification relies on the inputoutput linkages between inter-province sectors.Specifically,the intermediate input share and the intermediate demand share have been used as weights in measuring the aggregate supply or demand shocks caused by provincial containment policies.Note that,this chapter also leverages a generalized difference-in-differences design to conduct the assessment.The estimates implied that the sectoral shocks caused by with-province prevention and control policies had played a crucial part in explaining declines in export growth.Compared with the upstream shocks,the negative effects of downstream shocks caused by out-of-province containment measures were larger in magnitude.Notably,the export-suppression effect of the sectoral shocks would last for up to three months,and then it will attenuate in a longer run.Consistent with the findings in previous chapters,commodities that rely more on imported intermediate inputs will suffer more from the sectoral shocks,while commodities that rely more on domestic intermediate inputs will be much more resilient.This paper has several important policy implications.First,quick and stringent containment policies are cost-effective.Although these policies would lead to a dramatic decline in export growth,the export-suppression effect only lasted for about three months.To prevent imported COVID-19 infections and control domestically sporadic cases should be always in the first place,as regular prevention and control measures are dominant measures nowadays.In addition,the guiding principle,i.e.,the "dynamic zeroCOVID" policy,is essential in the future.Second,it is time to accelerate the new infrastructure initiative,including 5G networks,industrial Internet,as well as Internet of Things(IoT),through which enterprises can maintain their production as they meet the requirements of regular containment measures.Thus,disruptions in industrial chains and supply chains may be avoided.Third,the COVID-19 pandemic is a stress test.In response to de-globalization measures and protectionist trade policies,exporting firms need to reshape their global supply chains,avoiding excessive reliance on imported intermediate products.More importantly,they should also participate in domestic circulation and rely on more domestic supply chains.Local governments should play a larger role in facilitating the construction of an integrated domestic market,promoting the inter-regional free flow of factors of production,and stabilizing the domestic supply chains.