An Estimation Of The Costs Of Trade Protection In China

This paper first discusses the origin of the theme of this writing, and reviewed the empirical literature of trade protection in terms of methods. In this part, we introduce the arrangement of structure and innovation points and deficiency.In part II of this paper, we discuss the static costs of trade protection. Static cost of trade protection is separated into allocative effects, X-inefficiency, rent-seeking costs, the disappearance of new goods and smuggling (the administrative costs owing to the cost of actual implementation, therefore discussed in the analysis China's experience). When discussing the allocative effects, we discuss the cases under three kind of trade protection forms— import customs duty, the import quota and the export subsidy, and carried on it separately it under the cases of small country and the large nation. The X-mefficiency effect of trade protection comes from the trade protection causing the domestic enterprise to lack the full drive to pursue the profit maximization and to carry on the innovation. Because the trade protection can cause the large amount rent, thus it is easy to initiate massively seeking rents activity. This article briefly discusses the appearance of seeking rents in the trade protection, and analyses its influence on the economy and the society. The trade protection also can hinder the appearance of the new product and certain product vanishing, which is mainly a result of the economies of scale existence. The disappearance of new products can cause the loss of consumer welfare, and affect the economic growth. Large-scale smuggling can bring the huge influence to the entire national economy in various aspects. This article separately discusses the influence of smuggling under the tariff protection and the import quota protection.In the third part we discuss the dynamic costs of trade protection. This paper discusses three kind of dynamic costs: technological innovation, industrial upgrading and economic stability. Trade has an important role in promoting technological innovation, but trade protectionism would undermine that role through four channels: shortage of resources, limiting scale economy, blocking factors flow and hurting industrial safety. Excessive protection of trade protection would hinder the upgrading of the industrial structure. The trade protection causes the industrial structure and the industrial relation excessively relying on the exportation, and causes industry quality to be poor, thus would influence the economical stability to certain degree.In the fourth part, we do an empirical analysis of the costs of trade protection. We...