China Trade Research Articles

Digital trade, trade openness, FDI, and green total factor productivity

The rapid digitalization of global trade has introduced a transformative element to urban sustainability, but its specific impact on green total factor productivity (GTFP) remains understudied, particularly in the context of China's urban development. Although studies have explored digital trade's economic benefits, the interplay between digital trade, trade openness, and foreign direct investment (FDI) in shaping urban GTFP has not been thoroughly investigated. This study fills that gap by investigating the relation between digital trade and GTFP in China, utilizing a comprehensive provincial panel dataset from 2005 to 2021. Employing a fixed-effects model with various control variables, we find that digital trade significantly increases GTFP. The findings also reveal that both trade openness and FDI positively moderate this relation, amplifying digital trade's impact on urban green transformation. The heterogeneity analysis across Chinese regions provides nuanced insights, demonstrating that the effect is most pronounced in the developed eastern region, followed by the middle region, and has a less significant impact in the western region. These findings contribute to the growing discourse on digital trade and sustainable urban development, with important implications for policymakers seeking to use digital technologies to promote environmental sustainability and economic growth. Our findings highlight the importance of fostering digital trade, increasing trade openness, and attracting green FDI as effective strategies to drive urban green transformation and improve GTFP, while emphasizing the need to address regional disparities and potential challenges associated with digital trade implementation.

Are R&D-intensive firms more resilient to trade shocks? Evidence from the U.S.–China trade war

We study whether research and development (R&D)-intensive Chinese firms were more resilient during the 2018–2019 U.S.-China trade war. Using an event study, we confirm that (unsurprisingly) Chinese exporting firms that were most affected by the new U.S. tariffs suffered larger valuation declines than other firms. However, among those most affected, those that were R&D intensive suffered significantly less severe declines. We also identify a channel that allowed R&D-intensive firms to better absorb the trade shock: their production efficiency improved amidst the trade war, due to enhanced operational efficiency and lower operating costs. Furthermore, in response to the trade disruptions, numerous R&D-intensive Chinese companies acquired U.S. firms.

Outward direct investment as a shelter from external trade policy shocks: Firm‐level investigation of the US–China trade war

AbstractThis study examines the effects of external trade policy shock from the US–China trade war on firm value. Using a merged data set of Chinese‐listed companies, our empirical results reveal that Chinese firms conducting outward direct investment in the US have significantly higher stock returns around the date of the outbreak of the trade war as compared with the lower returns of exporting firms. This indicates a sheltering effect of pre‐existing outward direct investment activities. Moreover, we find that the sheltering effect is more pronounced for production‐oriented projects, high tech industries and tariff‐targeted sectors, while it is weaker for state‐owned companies.

China's International Trade of Parrots from 1981 to 2022 Based on the CITES Trade Database.

Parrots are popular with pet consumers and are one of the most traded groups of live birds around the world. China has been considered as an important country in bird trades, but we know little about China's import and export of parrots. Using the latest data available from the CITES Trade Database, we analyzed China's import and export of CITES-listed live parrots from 1981-2022 to better understand the patterns and dynamics of these trades. China imported 155,339 parrots of 173 species and exported 608,987 parrots of 42 species during the study period with an annual average of about 18,500 individuals, accounting for c. 5% of the global average number. The most imported parrots to China were Grey Parrot (Psittacus erithacus) and Monk Parakeet (Myiopsitta monachus), while the most exported ones were Fisher's Lovebirds (Agapornis fischeri), Rosy-faced Lovebirds (Agapornis roseicollis), and Yellow-collared Lovebird (Agapornis personatus). Since the early 21st century, China's imports of parrots gradually increased, but exports decreased more pronouncedly, making China's international parrot trade volume declining in the past 20 years. China's international parrot trade routes also changed over time, with the destination of parrot exports shifting from Europe to Africa and the Arabian region, while more parrots being gradually imported from countries in South America and Africa. The vast majority of parrots exported from China were captive-bred non-native species like Fisher's Lovebirds, while a substantial proportion of imported parrots were wild-sourced and the proportion has been increasing in the last decade. The fact that China exported much more parrots than imported suggests existence of large-scale parrot farming and domestic parrot trade in China. Attention needs to be paid to monitoring China's import of increasing proportion of wild-sourced parrots from South America countries and its potential impacts on their wild populations. Close monitoring of and more studies on domestic and illegal parrot trade are essential to fully understand the role China plays in the international trade of parrots.

Can Trade Policy Uncertainty Drive Green Innovation? Empirical Evidence From the US–China Trade War

ABSTRACTChina's rapid economic growth in recent years has coincided with heightened environmental regulations and an upsurge in greenhouse gas emissions, necessitating a greater emphasis on green innovation to mitigate environmental risks. Concurrently, the US–China trade war has elevated trade policy uncertainty (TPU). This study uses the TPU surge from the trade war as a quasi‐natural experiment, employing text analysis of annual reports to assess firms' TPU perceptions. Using a difference‐in‐differences method, we find that increased TPU significantly hinders green innovation. Firms' responses vary with environmental advantages, regulation levels, and government subsidies. Mechanisms include reduced environmental investment, decreased executive attention to environmental issues, and corporate social responsibility. These findings underscore the importance of a stable trading environment for promoting green innovation.

Strategic behaviors of renewable energy generation companies participating in the electricity and carbon coupled markets based on non-cooperative game theory

Renewable energy (RE) can participate in electricity and carbon market trading in China, which can help stimulate the investment of RE. Thus, we propose a bi-level model for non-cooperative game interactions among power generation companies (GenCos), considering the electricity and carbon coupled markets. The upper-level model considers strategic behaviors driven by maximizing profits for GenCos. The lower-level model includes a two-stage electricity market: the day-ahead market and the real-time market; it implements joint clearing of energy and reserves, and continuous trading with competitive auctions in the carbon market based on the clearing results of the electricity market. Simulations are performed based on the actual data of the power system in a certain region of Guangdong Province in China. The results show that electricity and carbon coupled markets can effectively reduce market costs and carbon emissions, improve the society welfare and RE benefits. The uncertain increase in RE output and higher installed capacity reduce the total revenue of the RE in the coupled markets. The initial carbon quota decomposition optimization decision of the coal-fired GenCos and gradual reduction in the initial carbon quota will increase the revenue of the RE GenCos.

Under double shadows: how U.S.–China trade relations and path dependence shape China's IP preliminary injunction system

ABSTRACT The current IP preliminary injunction system in China is an awkward mixture that has developed under two shadows: U.S.–China trade relations, and path dependence. This article traces the historical moments when China amended its rules on IP preliminary injunctions. It finds that, while U.S.–China trade relations facilitated the transplantation of equitable standards into the regime, the basic procedural framework, rooted in the civil law tradition, remains largely intact. These double shadows have introduced pressing problems into the system. However, most of these issues can be attributed to China's retention of its basic procedural framework, which is shared with and originates from the property preservation system. Path dependence theory aptly explains this developmental trajectory and offers normative guidance for future reforms. It may not be feasible to conduct a full cost–benefit analysis on establishing a standalone framework for IP preliminary injunctions in China, which would represent a radical alteration of the system. However, the developmental-evolution model of path dependence theory can still provide valuable insights, even if the system currently exhibits a semi-strong form of path dependence. Chinese legislators could design future incremental reforms with path evolution in mind, aiming for a gradual recombination that ultimately pulls the IP preliminary injunction system out of its original procedural framework. Once sufficient incremental reforms have accumulated, decision-makers can seize critical junctures (such as future escalations in U.S.–China trade conflicts) as opportunities to establish a new, standalone framework for IP preliminary injunctions, thereby breaking the lock-in loop.

This Is an Eventful Era: Exploring Event-Oriented Approaches to Organizational Research

This special issue explores the transformative role of discrete events in fostering changes at different organizational levels, challenging traditional feature-oriented approaches that focus on stable attributes of individuals, groups, and organizations. Joining the growing body of event-oriented research in diverse settings, the nine published articles evoke a novel theoretical lens (i.e., Event System Theory) to examine a number of discrete events (e.g., everyday change events, organizational downsizing, merger, corporate scandal, technology implementation, the U.S.–China trade war, the Black Lives Matter movement). Their findings demonstrate the interesting ways discrete events disrupt routines, prompt adaptation, and impact individual and collective behaviors across various levels within organizations. Our further analysis underscores the importance of adopting an event-oriented perspective for a better understanding of management issues, offering new insights and directions for future research. We hope this special issue provides a robust foundation for integrating event-centric research approaches into organizational theory, emphasizing the need for continued empirical investigation and theoretical refinement in a variety of management research domains, such as strategic management, organizational behavior, entrepreneurship, and human resource management.

How does informed trading affect credit bond spreads: Evidence from China's interbank bond market

China's interbank bond market is an institutional investor market, and transactions are more information-based. Whether and how informed trading can affect credit bond pricing is an urgent problem to be solved in the study of China's bond asset pricing. This paper uses credit bond issuance and trading data and stock high-frequency trading data from May 2014 to December 2020 to construct informed trading probability and bond liquidity indicators. Using regression analysis and adjustment and mediation effect test methods, this paper studies the impact of informed trading on China's interbank credit bond pricing and the channel role of liquidity. The results show that the probability of informed trading has a significant positive impact on credit bond spreads. Informed trading leads to an increase in credit bond spreads by amplifying bond illiquidity. The amplifying effect of informed trading on credit bond spreads is stronger for bonds with high illiquidity. The amplifying effect of informed trading on credit bond spreads will be stronger in private enterprises, enterprises with low information transparency, and high debt ratios. This study reveals the risk nature of informed trading in China's interbank bond market, which helps to deepen the understanding and management of the bond market.

Cotton market contagion: analyzing volatility spillovers across borders

PurposeThe paper analyzes the volatility transmission within the cotton markets by utilizing commodity futures prices from the USA, China and India, encompassing important global events that have significantly influenced the global cotton markets, like the China-USA trade dispute, the COVID-19 outbreak and the Russia–Ukraine conflict.Design/methodology/approachThe authors employ a volatility spillover measure developed by Diebold and Yilmaz (2009, 2012, 2014). Additionally, the methodology proposed by Baruník and Křehlík (2018), which divides the overall volatility spillover into short, medium and long-term segments has been used. To investigate the volatility connectedness, weekly (close-to-close) returns of the cotton futures contracts that are traded on the Chicago Board of Trade Dalian Commodity Exchange National Commodity Exchange of India (NCDEX), and Multi Commodity Exchange (MCX) are considered.FindingsThe paper identifies the presence of long-term volatility transmission among the three cotton futures markets. It demonstrates that a global shock like the Russia–Ukraine conflict has a greater impact on volatility in other markets than USA–China trade disputes. It also highlights the weakening role of the US cotton futures markets as a price leader for Indian and Chinese markets.Research limitations/implicationsSince only three major markets have been studied, the future studies can explore the interconnectedness by including other important markets including Brazil, Turkey, Bangladesh, etc. Further, the moderating role of relationship between other important variables such as cotton production, harvest, inventory, exchange rate, oil price, trade policies, etc. can be examined. Furthermore, the interconnectedness with the regional spot markets in India can also be examined to study how the volatility from the futures market can affect the volatility in the spot markets and vice-versa.Practical implicationsThe understanding of domestic food price volatility and its transmission from international to domestic markets is crucial for designing effective policies to address excessive volatility and protect vulnerable groups like producers, consumers, etc.Social implicationsThe findings emphasize on the substantial market dependence with the US and the Chinese markets which have a significant impact on the Indian markets with considerable implications for hedgers, producers and exporters, particularly during periods of higher volatility.Originality/valueThis study assesses the interdependencies among three major cotton-producing countries and the influence of factors like the USA–China trade tensions in 2018, the COVID-19 crisis and the Russia–Ukraine conflict in order to gauge the degree of volatility interconnection among these key players in the cotton market.

Optimization strategies for green power and certificate trading in China considering seasonality: An evolutionary game-based system dynamics

China has adopted renewable portfolio standards and tradable green certificates (including hydropower) to increase the proportion of green power used and reduce carbon emissions. However, hydropower generation is affected by seasonal factors, making it difficult to increase green power consumption in water-scarce areas. Trading electricity and green certificates in regions with different resource endowments can effectively solve this problem. Therefore, this study uses evolutionary game theory to explore the impact of the change in the policy of issuing green certificates for hydropower on the strategic choices of the trading parties. Based on the evolutionary game model, a system dynamics model is established to explore the optimization strategies of green power and certificate trading under the influence of seasonal factors. The results of the case study show that (1) the price of green certificates varies with seasonal changes. (2) Sellers with abundant hydropower resources should increase the amount of hydropower connected to the grid during the water-abundant period to help deficit areas achieve their consumption targets (3) Expanding the scope of green certificates can gradually eliminate government subsidies and incentives and reduce the government's financial pressure.

Correction: The regime complex for digital trade in Asia and China’s engagement

Correction: The regime complex for digital trade in Asia and China’s engagement

Leveraging friendshoring in response to sanctions: Essential insights for global managers

In the world that has become increasingly hostile and politicized, the use of sanctions has emerged as an often-used tool for enforcing global rules. Nevertheless, organizations engaged in international trade have found ways to circumvent imposed sanctions and deliver goods and services to the sanctioned markets through a variety of means including offshoring, nearshoring, and, most importantly, friendshoring. There has been a notable increase in these shoring phenomena, especially in the context of global disruptions, including the COVID-19 pandemic, the United States and China trade conflicts, and sanctions related to the Russia-Ukraine war. This study offers a rich account of how organizations overcome economic sanctions that lead to restrictions in trade among trading partners. After unique in-depth interviews with representatives from 44 organizations involved in trade in nine imposing, intermediary, and targeted countries, we synthesized six main friendshoring models often used in instances where sanctions are imposed. We end by offering prescriptive guidance for managers whose companies face difficult shoring decisions because of sanctions.

Особенности торговой политики Китая: текущее состояние и направления развития

This article analyzes the current state, main instruments, and directions of development of China's trade policy in the context of the confrontation between the two global economic leaders, China and the USA. Understanding the meaning that China embeds in the concept of "trade policy" will enable Russia to perceive the logic of China's decisions and effectively build cooperation with China in the economic sphere and the related ones. The aim of this study is to identify the peculiarities of China's trade policy. To achieve this, the article examines the main indicators and instruments of China's trade policy, considers the current viewpoints of Chinese economists on trade policy, and analyzes activities concerning its implementation. Particular attention is given to the methods China uses to increase its influence in the global economy. The findings demonstrate that through its trade policy, China aims not only to enhance its economic power but also to shape new global rules and standards, reflecting its aspiration for leadership in international economic relations. China’s tariff system and the enforcement of non-tariff measures effectively protect its domestic market from foreign competition and encourage investments in the development of competitive high-technology production on the global market. The article shows that in China, the concept of "trade policy" encompasses a broader set of tools and measures than the commonly accepted tariff and non-tariff measures. Within its trade policy framework, China addresses a range of tasks, from the internationalization of the national currency to uniting developing countries and gaining priority in setting technical standards for goods and services. It is shown that China has been working in this direction for several decades, specifically since the early 2000s.

The Effects of the Regional Comprehensive Economic Partnership on China’s Trade, Tariff Revenue and Welfare

Increasing attention is being paid to the role of regional economic integration in facilitating a country's trade. This is especially true for the state like China, which has the second largest GDP in the world. This study explores the effects of the Regional Comprehensive Economic Partnership (RCEP) on China, looking at changes in welfare, trade creation, trade diversion, and tariff revenue under four tariff reduction scenarios with RCEP members. The study evaluates how RCEP affects China's trade relations with Japan, Korea, ASEAN, Australia, and New Zealand by using the World Bank's World Integrated Trade Solution Software for Market Analysis and Restrictions on Trade (WITS-SMART) tool. The findings demonstrate increased market accessibility and competitiveness of commodities in the Chinese market, with notable increases in trade creation and diversion, especially with Korea and Japan. RCEP considerably increases welfare even though it results in lower tariff revenues, indicating that the advantages of lower trade costs and more effective supply chains exceed the fiscal drawbacks. The paper concludes with policy recommendations that emphasize the need for strategic adaptations in China’s trade policies to fully capitalize on the economic opportunities presented by RCEP, ensuring sustainable growth and the equitable distribution of trade benefits among all member states.

Connectedness and Shock Propagation in South African Equity Sectors during Extreme Market Conditions

This study examined the connectedness and propagation of risk in the South African equity sectors during the Global Financial Crisis (GFC), the European Debt Crisis (EDC), the US–China trade war, and the COVID-19 pandemic. Daily returns of nine Johannesburg Stock Exchange (JSE) super sectors were examined from 3 January 2006 to 31 December 2021. Applying the connectedness matrix and time-varying parameter vector autoregressive (TVP-VAR) model, in full sample and sub-periods, the study showed that dynamic total connectedness of the super sectors is high in absolute form (62%). Furthermore, it was found that the highest volatility connectedness was during the EDC (68.83%) and during the COVID-19 pandemic (68.57%), followed by the GFC (63.16%) and lastly the US–China trade war (42.09%), respectively. This suggests that the tendency for a systemic risk is highest during the EDC, COVID-19, and GFC periods, and lowest during the US–China trade war. The financial sector was the primary net-transmitter of shocks during the COVID-19 period, while the automobile and parts sector was the strongest net-transmitter of shocks during the GFC, EDC, and US–China trade war. Similarly, the strongest net recipient of shocks during GFC, EDC, and COVID-19 is the chemical super sector. The study concludes that there is a significant volatility connectedness among JSE super sectors. In addition, the JSE super sectors exhibit time-varying connectedness during extreme events. Moreover, the net-transmitter and net-receiver of shock do not change significantly during different crisis periods. The policy implications of the findings are highlighted in the concluding section.

The regime complex for digital trade in Asia and China’s engagement

AbstractThe rapid development of information and communication technologies over the past two decades has resulted in profound transformations in traditional economic and trade activities, leading to the scaling of digital trade across the Asian region and beyond. Drawing on the conceptual framework of the regime complex, this article seeks to delineate the main features of regional digital trade governance in the Asian region and China’s engagement with the regime-building process in this policy field. It demonstrates that the digital trade governance landscape in Asian countries comprises a collection of partially overlapping and nonhierarchical regimes, where different regional actors are formulating competing visions and approaches to digital trade governance. In addition, the dynamic nature of the digital trade regime complex in Asia and China’s evolving approach to digital trade governance is mutually constitutive. By selectively liberalizing in certain contexts while remaining conservative in others, China contributes to a more complex and less cohesive regional digital trade environment. China’s emphasis on standard-setting efforts and security considerations introduces additional complexities to the regime complex, potentially impeding the development of comprehensive governance regimes for digital trade in the region.

Media Content, African Swine Fever, a Trade War, and U.S. Lean Hog Futures

Abstract In 2018 and 2019, China’s outbreak of African swine fever (ASF) and the U.S.–China trade war captured media headlines worldwide. This research uses a unique data set of media headlines and sentiments to estimate the impact of media on U.S. lean hog futures prices for nearby and distant expiration contracts. Findings suggest futures prices are influenced by news media content, with results differing by time to contract expiration and sentiment of the headline. International headlines with positive and negative connotations toward ASF and trade war have more significant effects, indicating sensationalist media creates the greatest price movements compared to neutral headlines.

Sustainable education index and copper trade interconnections

The trend in copper trade raises significant concerns regarding global mineral resource sustainability. This study investigates how sustainable education impacts copper trade in China, analyzing data from 1990 to 2021. Findings reveal that a 1% increase in the Sustainable Development Index leads to a reduction in copper trade: exports decrease by 0.14%–0.27% and imports by 0.35%–0.57%, highlighting the negative influence of sustainable education on trade. GDP growth positively affects copper trade, while the official exchange rate impacts exports and imports differently due to currency fluctuations. Urbanization boosts both exports and imports, driven by infrastructure expansion. Additionally, loans to the private sector specifically enhance copper imports. To foster sustainable copper trade, China should invest in sustainable education, promote gender equality in education, encourage green economic growth, implement an effective carbon tax, and provide green loans for the copper sector.

Fragmentation in International Investment and Trade

Abstract We study the signs of fragmentation—that is, the process of weakening economic interdependence between blocs of countries—in world trade and investment during the U.S.–China trade war (2018–21) relative to the period preceding it (2014–17). We show that although bilateral flows between the United States and China have been badly hurt, there is still little evidence of a wider fragmentation, even for technology intensive manufactures. We find some shifts in global trade, especially toward Central and Eastern Europe and ASEAN countries. This may reflect partial reshuffling of global value chains but is not necessarily driven by geoeconomic factors. Both China and the United States have been favoring these regions during the trade war.