China’s Firm-Level Processing Trade: Trends, Characteristics, and Productivity

37 Pages Posted: 10 Apr 2012

See all articles by Miaojie Yu

Miaojie Yu

Peking University - China Center for Economic Research (CCER)

Wei Tian

Peking University - Guanghua School of Management

Date Written: April 10, 2012

Abstract

This paper provides a comprehensive overview of China’s processing trade using highly disaggregated 2010 transaction-level data. By highlighting the key role of processing trade in China’s foreign trade, we argue that various free-trade zones have served as important instruments in boosting processing trade. We then explore various characteristics of processing imports from both industry-level and firm-level perspectives: origin countries of imports, main products, transport modes, entry ports, consumption destinations, quality of commodities, and scope of processing trade. A careful estimation of firm-level total factor productivity using the Olley–Pakes approach suggests that processing firms are less productive than non-processing firms. We also contribute to the literature by offering an efficient way of matching firm-level production data with transaction-level trade data, a rather challenging task due to data format restrictions.

Keywords: Processing Trade, Export Processing Zones, Quality of Products, Firm Scope, Total Factor Productivity, Transaction-Level Trade Data, Firm-Level Evidence

JEL Classification: F1, L1, O1

Suggested Citation

Yu, Miaojie and Tian, Wei, China’s Firm-Level Processing Trade: Trends, Characteristics, and Productivity (April 10, 2012). Available at SSRN: https://ssrn.com/abstract=2037827 or http://dx.doi.org/10.2139/ssrn.2037827

Miaojie Yu (Contact Author)

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, Beijing 100871
China
+86-10-6275-3109 (Phone)

HOME PAGE: http://mjyu.ccer.edu.cn

Wei Tian

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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