The Impact Of Intermediate Goods Trade Liberalization On Chinese Manufacturing Firms’ Profits

Since China’s accession to the WTO,the degree of trade liberalization has increased unprecedentedly,and along with the further deepening of economic globalization,the import of intermediate goods gradually occupies a key position in China’s foreign trade,and the research on the liberalization of intermediate goods trade has become a hot topic in academic circles.While China promotes the transformation and upgrading of foreign trade and economic development by importing a large amount of high-quality and high-tech intermediate goods,the level of import trade liberalization implied in international trade will have direct or indirect effects on domestic macro and micro subjects.From the micro level,the ability of enterprises to obtain profits is the key to sustainable business.To clarify how the liberalization of import trade of intermediate goods affects the profitability of enterprises in an open environment is of profound significance to the long-term development of enterprises.Firstly,this paper reviews the literature on liberalization of intermediate goods trade,corporate innovation and corporate profitability.Secondly,with a focus on theoretical mechanisms,this paper explores the impact mechanism of intermediate goods trade liberalization on corporate profits,assumes that corporate innovation is the transmission medium of intermediate goods trade liberalization on corporate profits,explores the impact of intermediate goods trade liberalization on corporate innovation and the impact of corporate innovation on corporate profits at a deeper level,and puts forward relevant research hypotheses.Again,this paper uses the customs database,WTO database and China input-output table from 2000 to 2007 to measure the level of intermediate goods trade liberalization,and uses the database of Chinese industrial enterprises to get the data of relevant variables at micro level,and carries out empirical analysis and testing of research hypotheses by setting up an econometric model.The results of the study found that:(1)the increase in the liberalization of trade in intermediate goods has a significant negative impact on enterprise profits.The results still hold when the sample enterprises are further analyzed for heterogeneity in age,size,technology level,affiliation,trade mode,and region of affiliation.(2)The test of innovation transmission mechanism concludes that liberalization of intermediate goods trade is negatively related to corporate innovation;corporate innovation has a positive contribution to corporate profits.(3)On the whole,the increase of intermediate goods trade liberalization contributes to the decrease of enterprise innovation,which in turn has a negative impact on the growth of enterprise profit.Finally,this paper collates and summarizes the relevant findings,and puts forward corresponding policy suggestions at the level of relevant institutions and enterprises.