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The impact of the US–China trade war on domestic and multinational companies in China

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  • Joonhyung Lee
  • Duy Vu Nguyen

Abstract

This short paper investigates whether the US–China trade war has a different impact on domestic and multinational companies in China. Using the Orbis database with the coverage of ownership structure, we can identify Chinese multinational companies that own foreign subsidiaries with at least 51% stake. Then, using a panel dataset of Chinese companies from 2011 to 2019, we compare revenues of multinational and domestic companies before and after the trade war. We have found that multinational companies have about 8% higher in revenue after the trade war than domestic ones. These findings are consistent with the recent literature on the real hedging channel that operation flexibility reduces the impacts of tariff shocks.

Suggested Citation

  • Joonhyung Lee & Duy Vu Nguyen, 2023. "The impact of the US–China trade war on domestic and multinational companies in China," The World Economy, Wiley Blackwell, vol. 46(10), pages 2990-2998, October.
    • Handle: RePEc:bla:worlde:v:46:y:2023:i:10:p:2990-2998
    DOI: 10.1111/twec.13402
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