Diversification of intermediate input imports and the quality of Chinese exports

LI Xiufang1 SHI Bingzhan2

(1.Economics School, Tianjin University of Finance and Economics,)
(2.Economics School, Nankai University)

【Abstract】This article analyzes the determinants and mechanisms for improving the quality of Chinese exports from the perspective of diversification of imported intermediate inputs. In theory, the diversification of imported intermediate inputs can influence export quality through marginal-cost effects and fixed-cost effects and is limited by the firm’s absorptive capability. With a combination of data from the Chinese Customs Database and the China Industrial Enterprise Database, we arrived at several conclusions. First, the inputs imported by Chinese firms are becoming less diversified. Second, inputs imported by state-owned enterprises are the most diversified whereas those imported by foreign-owned firms are less, and the input imports of Chinese owned private firms are the least diverse. Third, on average, the diversification of import inputs improves the quality of Chinese exports, but this positive effect only holds true for foreign-owned enterprises, intermediate imports from OECD countries and samples of 2004 to 2006. This phenomenon may be attributed to the low absorptive capability of Chinese-owned firms or the relatively weaker marginal cost effect of diversification than fixed cost effect.

【Keywords】 intermediate inputs; import; diversification; product quality;

【DOI】

【Funds】 Humanities and Social Science Fund 13YJA790055 of the Ministry of Education

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(Translated by YANG Xiaojian)

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This Article

ISSN:1002-4670

CN: 11-1692/F

Vol , No. 03, Pages 106-116

March 2016

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Article Outline

Abstract

  • 1 Proposal of the question
  • 2 Econometric model, data and descriptive analysis
  • 3 Econometric regression results and analysis
  • 4 Conclusion and policy implication
  • References