How does Anti-dumping Affect Export Product Quality?

Abstract

For a long time, China has been facing a severe anti-dumping situation. The number of anti-dumping lawsuits China has suffered for 23 consecutive years has ranked first in the world, accounting for 24.68% of the global anti-dumping lawsuits. In addition, the global anti-dumping against China is discriminatory (Bao, 2011), and European Union, the United States, and Japan have not recognized China’s market economy status, which will make it easier for them to initiate anti-dumping against China. Encountering anti-dumping will adversely affect China’s export, but it will also force domestic firms to make an aggressive trade strategy change. This paper examines the impact of anti-dumping on Chinese export quality, and attempts to reveal the possible “unexpected joy” of anti-dumping from a quality perspective. At the macro level, China is currently in a critical development period from a large to a strong manufacturing country. Understanding how anti-dumping affects Chinese export quality and its internal mechanism is vital to China’s economic development. At the micro level, how to deal with the adverse effect of anti-dumping, and how to achieve transformation, upgrading and high-quality development after anti-dumping are also issues that domestic firms need to be considered in depth.This paper studies the impact of anti-dumping on Chinese export quality from both theoretical and empirical perspectives. At the theoretical level, by combing and summarizing the existing literature, this paper believes that anti-dumping will improve export product quality through both demand and supply sides and show firm-level heterogeneity. Based on the theoretical analysis, two hypotheses are proposed. At the empirical level, this paper measures the quality level of Chinese firms’ export products from 2000 to 2013, combining with the anti-dumping database, and examines the impact of foreign countries’ anti-dumping measures on Chinese firms’ export product quality by using a difference-in-difference method.It comes to the following conclusions: Firstly, anti-dumping measures can improve firms’ export product quality. Secondly, the lower the firm’s initial export product quality, the lower the firm’s productivity level, and the bigger the product’s substitutional elasticity, the bigger the improvement of product quality after anti-dumping measures. With differential analysis, this paper further finds that firms located in middle and western regions comparing with firms located in the eastern region, single-product and single-export destination firms comparing with multi-product and multi-export destination firms, and domestic firms comparing with foreign firms, their export quality increases more after foreign anti-dumping.The conclusions obtained in this paper are helpful for a more comprehensive understanding of the effect of foreign anti-dumping against China from different perspectives. Although anti-dumping will reduce the export volume of Chinese firms, it will force domestic firms to make an aggressive trade strategy change, and force Chinese firms to improve the quality of export products, which has become the “unexpected joy” of encountering anti-dumping.