Trade Environment Changes and the Expansion of Private Chinese Exports

Abstract

This paper examines how changes in China's trade environment contributed to the rise in private firm exports. Data from 1997 to 2009 reveal that both increased exposure to multinational firm exports in related industries and expansion in private firm imports at the broad industry level contributed to private firm export growth. The benefits of multinational exposure are particularly strong for consumer goods, and the benefits of private firm provincial imports are most strongly linked to private firm exports of capital goods and intermediate inputs. In contrast, special economic zones and technology zones did not increase private firm exports. Further investigation of the export transaction data at the product level suggest that Chinese private firm export capability was increased by (1) improvements in product quality that was fostered by proximity to multinational firms; and (2) improved access to imported intermediate inputs.