Has COVID-19 Changed China's Digital Trade?-Implications for Health Economics.

Feng Hu,Zenan Dong,Tianyu Hu,Shaobin Wei,Ming Zeng,Zongjian Wu,Ning Su,Zhigang Duan,Haiyan Zhou,Haitao Zhou,Xun Xi,Xiaolei Li,Liping Qiu,Haibo Zhou,Ting Wan,Shaobo Yang

doi:10.3389/fpubh.2022.831549

Abstract

Digital technologies have played a significant role in the defense against the COVID-19 pandemic. This development raises the question of whether digital technologies have helped Chinese exports recover quickly and even grow. To answer this question, we study monthly data on Chinese exports to 40 countries/regions from January 2019 to June 2020 and covering 97 product categories. The study takes the COVID-19 outbreak as a natural experiment and treats digital trade products as the treatment group. Using a generalized difference-in-differences (DID) approach, we empirically investigate how this major global public health crisis and digital trade have influenced Chinese exports. Our empirical analysis reveals that the COVID-19 pandemic has inhibited China's export trade overall, digital trade has significantly promoted trade, and the supply mechanism has played a significant role in promoting the recovery of exports. Heterogeneity tests on destination countries/regions reveal that digital trade has significantly promoted exports to countries/regions with different income levels, with a more significant effect on low-risk destinations than on high-risk destinations. The sector heterogeneity test demonstrates that digital trade has enhanced the export recovery of sectors dealing in necessities for pandemic prevention. Other robustness tests, including parallel trend and placebo tests, support the above conclusions. Finally, we extend the research conclusions and discuss their implication for health economics and the practice of fighting COVID-19.

Highlights

COVID-19 has become one of the most severe global public health crises and has led to a serious economic crisis
This paper aims to examine the role of digital technology in promoting China’s export recovery and growth as COVID-19 has severely suppressed international trade. in particular, this paper takes the pandemic as a natural experiment under a seminatural experimental approach to policy effect assessment
Considering that digital trade has played a significant role in fighting the pandemic [1], we divide Chinese exports based on the degree of digitalization of products to acquire the control and treatment groups, thereby observing how digital products have influenced Chinese exports before and after the pandemic

Summary

Introduction

COVID-19 has become one of the most severe global public health crises and has led to a serious economic crisis It has slowed economic growth and worsened employment prospects [1], and it may continue to impact the world [2]. According to the National Bureau of Statistics of China, China’s GDP growth rate changed from negative to positive in Q2 2020, as did the growth rate of cargo imports and exports in Q3 2020, despite the shocks caused by the pandemic. These outcomes prove that the impact of a general lockdown on the economy is temporary and controllable and does not alter megatrends of economic development [4]

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