News: Working Papers
Australia is estimated to have foregone export revenue of around US$4.9 billion (A$6.6 billion) over July 2020 to February 2021 as a result of China’s restrictions or discriminatory purchasing affecting eight key commodities – coal, copper ores and concentrates, frozen beef, wine, cotton, barley, rough wood and rock lobster.
This paper explores the impact of Chinese subsidy interventions in the upstream sector on the competitiveness of the downstream sector. In particular, the paper investigates the effect of Chinese subsidies on basic metal products on the export competitiveness of downstream sectors in other major trading countries. To explore the impact of base metal subsidies interventions on the downstream sector of a trading partner, we exploit both temporal variation in subsidy interventions and in base-metal consumption by the downstream sector.
At the start of 2020, the US-China Economic and Trade Agreement (the Phase One Agreement or Agreement) captured the attention of Australian policy makers and business. China had agreed to substantially increase goods imports from the United States in 2020 and 2021 and to accept certain US standards and conformity assessment procedures to assist US companies to access Chinese agricultural markets.
Subsidization by states of their domestic industries to gain competitive advantage abroad is a perennial topic in international trade discussions. As the world moves into a multipolar environment and China rises in economic prominence, the rules governing subsidies, particularly to the industrial sector, are in the spotlight.
This work is licensed under Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
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