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Trade Liberalisation and Chinese Firm’s Exports: Sourcing from Indonesia

In: Input Trade Liberalization in China

Author

Listed:
  • Lili Yan Ing

    (Economic Research Institute for ASEAN and East Asia (ERIA), University of Indonesia)

  • Wei Tian

    (Peking University)

  • Miaojie Yu

    (Peking University)

Abstract

How much can a country expand its exports? It could either export more in terms of the quantity of goods (intensive margins), more in terms of the variety of goods (extensive margins) or move to a higher quality of goods (Hummels and Klenow in Am Econ Rev 95:704–723, 2005). The conventional trade theorem predicts that a country will export goods that use its abundant factor intensively. In the North–South trade framework, this implies that developed countries will export capital-intensive goods, while developing countries will export labour-intensive goods. However, as tariffs decline, trade grows not only between countries with different levels of intensity of factors of production, but also between countries with similar levels. Furthermore, as suggested by Bernard et al. (Am Econ Rev 93:1268–1290, 2003), the increase of North–South trade generates more trade between developing countries as countries in different developing stages engage in different stages of global value chains.

Suggested Citation

  • Lili Yan Ing & Wei Tian & Miaojie Yu, 2023. "Trade Liberalisation and Chinese Firm’s Exports: Sourcing from Indonesia," Contributions to Economics, in: Input Trade Liberalization in China, pages 183-204, Springer.
    • Handle: RePEc:spr:conchp:978-981-99-7599-0_8
    DOI: 10.1007/978-981-99-7599-0_8
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