Industrial Subsidies and their impacts on exports of trading partners: The China Case

Using panel data for 137 sectors in 40 major trading partners of the Chinese economy, the results reveal that a one-unit increase in Chinese subsidies decreases competitors’ exports by an average of 16.6%.

This indicates that an increase in one standard deviation of Chinese subsides in the basic metal sector reduces exports in the other major economies by 0.17 percentage point. The findings reveal that the impacts of Chinese subsidies interventions are larger and statistically significant for the exports of developed countries, and metal intensive users in the downstream sectors.

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By Dessie Tarko Ambaw, Institute for International Trade University of Adelaide & Shandre Thangavelu, Institute for International Trade University of Adelaide