Antidumping and Multiproduct Firm Export Activity: Evidence from Chinese Manufacturing Firms
XU Jiayun, ZHANG Junmei, LIU Zhuqing
APEC Study Center, Nankai University; Institute for Contemporary China Studies, Tsinghua University; School of Economics, Nankai University; School of Economics, Fujian Normal University
Summary:
Since the reform and opening up, foreign trade in China has experienced an unprecedented level of rapid development. China has ranked first in the world in terms of trade scale and volume for many consecutive years and has long benefited from economic globalization. However, in the context of a new round of trade protectionism, China faces increasingly serious trade barriers in overseas markets. Certainly, enhancing the competitiveness of export enterprises and their ability to respond to foreign antidumping investigations can help achieve the orderly development of high-quality export trade and “external circulation.” This paper attempts to answer the following related questions: What effect do antidumping measures have on the export activity and productivity of Chinese firms？ By what mechanism are these effects realized？ Theoretically, antidumping measures have a multifaceted effect on export enterprises. Encountering antidumping measures increases production costs, weakens the price advantage and reduces profits, and thus negatively affects exports. As antidumping measures threaten the survival of export enterprises and intensify the competitive pressure they face, antidumping measures force enterprises to change their transformation and upgrade strategies to improve efficiency and product quality, fundamentally enhancing the competitiveness of their products. Therefore, the effect of antidumping measures on China's export enterprises represents an empirical problem. By answering the questions posed above, we can evaluate the operating conditions of China's export enterprises and deepen our understanding of the mechanism by which antidumping measures affect export enterprises. The answers to these questions also have strong practical significance for China's transformation of its economic development mode, the innovation-driven manufacturing industry and enhanced international competitiveness against the background of the global value chain. The results show that for Chinese multiproduct firms, encountering antidumping measures has a positive effect on export prices, the concentration of export products and export market diversification but a negative effect on export volume and scope (i.e., number and variety of export products). These effects are limited by the firm's downstream and upstream participation in the global value chain. Heterogeneity tests show that the effects of encountering antidumping measures on export activity differ significantly among multiproduct firms depending on characteristics such as the type of ownership and mode of trade. Finally, by constructing a firm-level product competitiveness index, we find that Chinese multiproduct exporting firms tend to export a broader product mix, giving such firms a competitive edge and raising their productivity. This effect increases gradually as procedures for responding to antidumping measures are promoted. These conclusions indicate that encountering antidumping measures leads firms to focus on exporting core products and thus promotes the efficiency of Chinese export firms in the long run. This paper makes the following innovative contributions. First, it combines the heterogeneous trade theory of manufacturers and products with micro data from Chinese multiproduct export firms to explore the effects of antidumping measures on the export behavior of these firms from the perspective of the internal export product structure. In contrast to most of the literature, this paper not only examines the effects of encountering antidumping measures on the scale of the quantity and types of export products but also examines the effects on export prices, the concentration of export products and the diversification of the export market. Thus, this paper not only enriches the literature on the effect of antidumping measures on exports but also deepens our understanding of how antidumping measures affect a firm's export behavior. Second, in addition to using the propensity score matching-difference-in-differences (PSM-DID) method to investigate the average effect of antidumping measures on firms' export behavior, this paper incorporates the global value chain into its analytical framework. By measuring upstream embeddedness, downstream embeddedness and global value chain status, this paper investigates the role of global value chain status in the effect of antidumping measures on firms' export behavior. Few studies address the role of the global value chain in the effect of antidumping measures on trade. Third, this paper further explores the effect of antidumping measures on the productivity of multiproduct firms from the perspective of intra-firm export product reallocation, and thus it enriches the literature on the effect of antidumping measures on exports.
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