Since the reform and opening up,China has actively promoted the liberalisation of trade in intermediate goods,systematically and significantly reducing tariff and non-tariff barriers,and encouraging import trade,especially since China’s accession to the WTO at the end of 2001,which has led to a profound reform in trade liberalisation and a major step forward in the liberalisation of import trade in intermediate goods.In the context of opening up to the outside world,China’s industry is deeply involved in the world division of labour,but is still facing the status quo of being large but not strong,along with the gradual disappearance of the labour advantage,it is urgent to explore the path of industrial structure upgrading.China’s trade in intermediate goods occupies the majority of the import trade,and a large amount of intermediate goods imported by enterprises are in turn invested in the industrial sector.The liberalisation of the import trade in intermediate goods has led to the lowering of tariff and non-tariff barriers to intermediate goods,which has led to a decline in the cost of imports for industrial enterprises and the possibility of importing a greater variety of intermediate goods at better quality and lower prices.This paper uses data to analyse the development and relevance of China’s intermediate goods import trade and industrial structure,and constructs a quasi-natural experiment using China’s accession to the WTO as a policy node,matching the database of Chinese industrial enterprises,tariff data and city data from 2000-2006,and calculating the intermediate goods tariff as well as industrial structure for 225 cities indicators such as rationalization and heightening,and employs a double difference model to systematically examine the impact effects and potential mechanisms of intermediate goods import trade liberalization on industrial structure upgrading using a continuous grouping approach.The findings:(1)After passing the parallel trend test,this paper proves that the liberalisation of trade in intermediate imports significantly promotes the rationalisation and heightening of industrial structure,and the results of this paper remain robust based on a number of validity tests such as the expected effects test,the endogeneity test using instrumental variables and a series of other robustness tests.(2)The heterogeneity analysis finds that the promotion effect of import trade liberalisation of intermediate goods on industrial structure upgrading is stronger in coastal cities and cities with strong human capital compared to inland cities and cities with relatively weak human capital;(3)In terms of the mechanism path,import trade liberalisation of intermediate goods can improve the industrial structure through two channels: increasing the level of technological innovation and reducing factor market distortion;and(4)Expanding the analysis,we found that the liberalization of import trade in intermediate goods could enhance the rationalization level by increasing the heightening of the industrial structure,while the opposite could not be achieved,proving that the heightening of China’s industrial structure at that time might be a "false heightening".The findings of this paper enrich the literature on the liberalisation of trade in intermediate goods and related areas of industrial structure.The conclusions of this paper have important implications for China’s persistent implementation of the strategy of opening up to the outside world,the in-depth promotion of the reform of the liberalisation of trade in intermediate goods,the deep integration into the world division of labour and trade pattern,and the optimisation and upgrading of industrial structure in the direction of rationalisation and heightening. |