China's Foreign Trade Behavior in the 1980's: An Empirical Analysis

IMF Working Papers, January 1, 1992

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This paper studies the behavior of China’s foreign trade in the 1980s.
Chinese customs data are used to construct, for the first time, quarterly unit value and volume series that are then used to estimate foreign trade income and price elasticities.
The estimated export supply price elasticities are negative and became even more negative after the reforms in 1985.
The import price elasticity is very close to minus one.
These results suggest that administrative controls still have a dominant effect on China’s trade and may also suggest that reforms in the management system of Chinese enterprises were not sufficient to create profit maximizing behavior by managers.

Data source: Chinese customs data.
New series constructed: quarterly unit value series and quarterly volume series.
Empirical focus: estimation of foreign trade income and price elasticities using the constructed quarterly series.

Export supply price elasticities: negative; became even more negative after the reforms in 1985.
Import price elasticity: very close to minus one.
Implication: administrative controls continued to have a dominant effect on China’s trade in the 1980s.
Implication: management-system reforms of Chinese enterprises may not have been sufficient to induce profit-maximizing behavior by managers.

Subject: Commodities, Export prices, Exports, Imports, International trade, Price elasticity, Prices.
Keywords: demand price, exchange rate, Export prices, Exports, import data, import elasticity, import price elasticity, Imports, Price elasticity, price variable, supply price, terms of trade, unit value, value indices, value target, volume indices, world imports, WP.