Research On Government Subsidies And Low-income Rate Traps For Chinese Exporters

China's total export-import volume exceed the United States in 2013,and total volume of trade at first place in the world.While making great achievements,we must also see the problem of "low prices and poor quality" for China's export products.Therefore,in the study of China's exports,not only to study China's export "quantity",but also to study China's export "quality".In this paper,from the perspective of markups,we study the impact of export and government subsidies.In the theoretical part,this paper uses Melitz&Ottaviano(2008)'s theoretical model,analyzes the effect of "competitive effect" and "selective effect" on markup,and then studies that when government subsidies exists,it changes the critical cost of enterprises to enter the market,increases market competition,and then results in markup lower.In the empirical section,this paper chooses the latest De Loecker&Warzynski(2012),s method to calculate the markup of Chinese micro enterprises from 1999 to 2009,and then establishes the econometric model of export,government subsidy and markup.The empirical conclusion is that whether the whole sample or sub-sectors,regions and ownership,exports,subsidies and the interaction between the two items are significantly negative.It implies that exporters5 markup is lower than non-exporters5 markup in China.Subsidized enterprises?markup is also lower than not subsidized,and the government subsidies make the gap between the exporters and non-export enterprises increase.So the government subsidies can partly explain the low markup trap of China's exporters.Considering the problem of sample selectivity bias and endogeneity,this paper uses the method of propensity score matching(PSM)for further verification,and finally obtains the same result as before.Finally,in order to investigate the effect of the "competition effect" over the "selection effect" leads to exporters5 markup is lower than non-exporters' markup,In this paper,we use the PSM-DID method to verify this view form the point of the corporations' pricing,and the empirical results also support this assumption.According to the results of theoretical analysis and empirical analysis,this paper suggests that the government should improve the subsidy policy,focuses on subsidizing high value-added enterprises,promotes enterprises transformation and upgrading,improves product quality,promotes domestic market reform,breaks down regional barriers and reduces enterprise sales costs,promotes domestic market development.