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| Supply Chain Spillover Effect of the Export Tax Rebate-Sharing Reform in China |
| LI Tao, WU Yingyi, ZHENG Dengjin
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| School of Economics/School of Accounting,Central University of Finance and Economics |
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Abstract Taxation is deeply linked to China's economic growth. A robust fiscal and tax framework is essential for efficient resource allocation, market integration, social equity, and long-term national stability, and constitutes the institutional foundation of a well-functioning market economy.
Since the reform and opening-up, Chinese firms have made remarkable progress in “going global”, bolstered by strong policy support. As a key policy instrument facilitating the dual circulation of domestic and international economies, the export tax rebate effectively reduces the tax burden on exporters and enhances their international competitiveness. Before 2015, export tax rebates were jointly financed by central and local governments. However, uneven regional development and increasing local fiscal pressures led to inefficiencies in rebate payments and delays in capital recovery for exporting firms. When exporters rely on suppliers’ funds for financing, liquidity risk is transmitted upstream, undermining supply chain security and stability. Addressing exporters’ financing constraints and revitalizing supplier liquidity through fiscal reform has thus become an urgent policy priority. The reform of the export tax rebate-sharing in 2015 represents an important institutional innovation. The export tax rebate-sharing mechanism defines how the central and local governments share fiscal responsibility for export tax rebate payments. By transferring rebate expenditure entirely to the central government, the reform alleviates local fiscal burdens, shortens rebate processing time, and accelerates capital recovery for exporters, thereby reducing the tie-up of suppliers’ funds. This paper raises three research questions:(1) Does the reform generate spillover effects across supply chains? (2) Through which mechanisms do these effects occur? (3) Do regional and firm-level heterogeneities exist? Answering these questions contributes to a deeper understanding of the reform’s significance for safeguarding supply chain security and stability.
Using data form A-share listed companies over the period 2007-2024, this study documents several key findings. First, following the reform of the export tax rebate-sharing mechanism, exporting firms significantly reduced their encroachment on suppliers’ working capital relative to non-exporting firms. The reform operates through two key channels, alleviating financing constraints and facilitating cross-regional procurement, which ease firms’ financing pressure and lower procurement costs, thereby generating both direct and indirect spillover effects along the supply chain. Second, these spillover effects exhibit notable heterogeneity. At the regional and industry level, the effects are stronger in regions with higher government efficiency, better business environments, and more competitive industries. At the firm level, the effects are more pronounced among non-state-owned enterprises and exporters located closer to ports. Third, the results suggest that adjustments to the rebate-sharing ratio help promote balanced regional development and optimize the tax structure. Moreover, the reform mitigates asymmetric supply-demand fluctuations at the industry level and improves the efficiency of capital circulation across the supply chain. These results remain robust across a battery of alternative specifications and robustness tests.
This study makes several contributions. First, it extends the literature on the export tax rebate-sharing reform by incorporating a supply chain spillover perspective. While prior research has focused primarily on firm-level outcomes, such as export performance and procurement location choices, it has largely overlooked how the reform transmits effects through supplier–customer networks linked by trade credit. This paper addresses that gap by providing systematic empirical evidence of such spillover effects and offering policy implications for further refining the reform. Second, it identifies the mechanisms through which the reform shapes inter-firm trade credit arrangements, thereby contributing to the broader literature on supply chain spillovers. Third, the findings provide empirical evidence that can guide further refinement of the export tax rebate-sharing mechanism and inform the design of proactive fiscal policies aimed at strengthening China's macroeconomic governance.
The findings offer several policy and managerial implications. First, it is essential to clearly delineate fiscal responsibilities between central and local governments to ensure timely and efficient disbursement of export tax rebates. In particular, enhanced financial support should be directed toward non-state-owned enterprises to improve capital flows, mitigate the risk of supply chain disruptions, and safeguard supply chain stability. Second, policymakers should promote innovation in supply chain finance to diversify firms’ funding sources. A collaborative credit management framework should be established to facilitate supplier credit evaluation and risk assessment, thereby enhancing the resilience of both industrial and supply chains. Third, at the firm level, companies should deepen collaboration with supply chain partners to foster coordinated upstream and downstream development. Through stronger financial cooperation and deeper supply chain integration, firms can bolster their long-term competitiveness and sustainable growth capacity.
In sum, this study provides robust evidence that the export tax rebate-sharing reform generates significant positive spillover effects on supply chain performance, offering both theoretical insights and practical guidance for further fiscal reform and supply chain governance.
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Received: 08 September 2025
Published: 02 June 2026
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