How did China's zero Covid policy affect its exports?

Abstract

AbstractThis paper examines the impact of China's “Zero‐Covid” policy on subnational cross‐region export performance during 2019–2021. Using monthly export data at the product‐destination level for China's 31 provinces and municipality cities, we find that new infections in a region have a significantly negative effect on the region's export growth, particularly for non‐processing exports and industries with low dependence on remote working and products that are more substitutable and used mostly in the downstream of supply chains. However, restrictions on people inflows have no significant effect. The severity of the pandemic in export destinations is negatively correlated with China's export growth, suggesting an important demand‐side reason for China's export downturn during the pandemic.