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The political economy of tariff protection in China: evidence from the WTO accession

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  • Chang Hong

Abstract

We analyze China's tariff rates at WTO accession using a political economy approach. A model drawing on Branstetter and Feenstra ( ) is used to derive an optimal tariff rate for each industry. The model predicts that a government would set a high tariff rate if an industry is of large stateowned enterprise (SOE) share, multinational share, or small foreign import share. From the model we reveal the Chinese government's preference towards different interest groups under the binding tariff constraint from the WTO commitments. The estimated structural parameters imply that the political weights on both the SOE profits and consumer income diminish with the economic opening. More important, the government still favours SOEs over consumer income. Our findings are consistent with the special features of China's economy.

Suggested Citation

  • Chang Hong, 2013. "The political economy of tariff protection in China: evidence from the WTO accession," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1295-1316, November.
    • Handle: RePEc:cje:issued:v:46:y:2013:i:4:p:1295-1316
    DOI: 10.1111/caje.12049
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    Cited by:

    1. Jianxing Lyu & Sören Prehn & Yanjie Zhang & Thomas Glauben & Yinchu Zeng, 2021. "Trade creation, political sensitivity and product exclusions: the political economy of agriculture protection in China’s FTAs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 627-657, July.
    2. Sonia Naccache, 2009. "The Political Economy Of Trade Policy In Tunisia," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 31-58.
    3. Sonia Naccache, 2008. "The Political Economy of Trade Policy in Tunisia," Working Papers 438, Economic Research Forum, revised 09 Jan 2008.
    4. Mumtaz Hussain Shah, 2017. "Inward FDI in East Asian & Pacific Developing Countries due to WTO Led Liberalisation," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(2), pages 1-20, June.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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