Trade Implications of China's Subsidies
IMF Working Papers, August 23, 2024
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- Trade Implications of China's Subsidies
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Bibliographic details
- Authors: Lorenzo Rotunno, Michele Ruta
- Published: August 23, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400282478.001
Summary of study and scope
- Available data show a marked increase in subsidy utilization in China and in other major economies between 2009 and 2022.
- The paper investigates effects of China's subsidies on international trade flows at the product level over the period 2009–2022.
- Analysis includes product-level trade flows, supply-chain linkages, and decomposition into price and quantity effects.
Main empirical findings
- Subsidies promoted Chinese exports and limited imports.
- Supply-chain linkages magnify effects: subsidies given to upstream industries expand significantly the exports of downstream industries.
- Price and quantity decomposition at the product level:
- China's subsidies lowered export prices and boosted export quantities in certain sectors, including:
- metal products
- furniture
- autos
- In other sectors, evidence is more consistent with quality upgrading rather than price-driven volume expansion, notably:
- electrical machinery
Subject areas and keywords
- Subject: Export prices, Export subsidies, Exports, Imports, International trade, Prices
- Keywords: China, China's subsidy, Domestic subsidies, Export prices, Export subsidies, Exports, exports of downstream industry, Global, Imports, International trade, metal products, Overcapacity, Spillovers, supply-chain linkage, trade implication
IMF Working Paper: "Trade Implications of China's Subsidies" by Lorenzo Rotunno and Michele Ruta, Working Paper No. 2024/180 (43 pages), DOI: https://doi.org/10.5089/9798400282478.001.
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- Working Paper