Anti-dumping petitions and exports. Evidence on the People’s Republic of China during the global financial crisis
| Pages | 194-212 |
| Date | 05 October 2015 |
| Published date | 05 October 2015 |
| DOI | https://doi.org/10.1108/JCEFTS-05-2014-0007 |
| Author | Faqin Lin,Hsiao Chink Tang,Lin Wang |
| Subject Matter | Economics,International economics |
Anti-dumping petitions and
exports
Evidence on the People’s Republic of China
during the global nancial crisis
Faqin Lin
School of International Trade and Economics,
Central University of Finance and Economics (CUFE), Beijing, China
Hsiao Chink Tang
Ofce of Regional Economic Integration, Asian Development Bank,
Metro Manila, Philippines, and
Lin Wang
Institute of Economics, Chinese Academy of Social Sciences, Beijing, China
Abstract
Purpose – The purpose of this paper is to quantify how the People’s Republic of China’s (PRC) export
volume affects the anti-dumping (AD) petitions led by its major trading partners against the country.
Design/methodology/approach – Focusing on the AD petitions at the Harmonized System (HS)
Code eight-digit level and the PRC’s exports at the HS two-digit level to its major trade partners during
the nancial crisis, we construct three instrument variables for export volume within HS two-digit level
variation in the variables. These instruments – documents required, time taken and container charges
incurred for goods traded across borders – represent trade costs obtained from World Bank’s Doing
Business Project. We nd rising exports from the PRC lead to rising AD petitions against the country.
Findings – Instrumental variable estimates indicate that a 1 percentage point rise in the PRC’s export
volume raises the number of AD petitions against the country by about 0.25 percentage points, and the
probability of receiving AD petitions by 3.5 per cent. These estimates are about 10 times larger than that
found in ordinary least square regressions.
Originality/value – Their quantitative signicance underlines why it is important to consider the
issue of export endogeneity in the estimation, and that the failure of the current trade statistics to
account for the true value-added of traded goods particularly disadvantaged the PRC given its position
as the factory of the world.
Keywords International trade, Anti-dumping, Instrument variable, The people’s Republic of China
Paper type Research paper
1. Introduction
The People’s Republic of China (PRC), the world’s largest exporter, accounts for 11.3 per
cent of the world’s total exports in 2012[1]. The country’s export capacity threatens
established trade patterns (Bown and Crowley, 2007), prompting protectionist measures
JEL classication – F13, F14, F59
The views expressed are the author’s and do not necessarily reect the views and policies of the
Asian Development Bank, its Board of Directors or the governments that ADB members represent.
The current issue and full text archive of this journal is available on Emerald Insight at:
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JCEFTS
8,3
194
Journalof Chinese Economic and
ForeignTrade Studies
Vol.8 No. 3, 2015
pp.194-212
©Emerald Group Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-05-2014-0007
taken by its major trade partners, particularly from the USA and the European Union
(EU) against the country (Zhou and Cuyvers, 2009). Empirical literature supports this
observation of a positive link between export volume and anti-dumping (AD) petitions. Mah
(1999),Leipziger and Shin (1991) and Irwin (2004) point out that the US domestic industry is
more likely to initiate an AD case if there has been a surge in imports from a particular
country. Prusa and Skeath (2002) suggest that being a big exporter matters for AD petitions.
Zhou and Cuyvers (2009) note that major exporting countries to the EU are more likely to
face AD actions. In addition, there is a large literature that examines the trade destruction
and trade diversion effects caused by AD petitions, such as, Staiger and Wolak (1994),Prusa
(2001),Niels (2003),Durling and Prusa (2006) and Ganguli (2008).
Despite the well-established positive association between export volume and AD
petitions, the presence of reverse causality from AD petitions to export volume makes
the task of clearly delineating the causal effect of interest a perennial empirical
challenge. This paper’s main aim is, therefore, to identify the true causal effect of export
volume on AD petitions based on a set of trade costs – documents required, time taken
and container charges incurred when goods are traded across borders – that help to pin
down exogenous variations in the export volume. The focus on the PRC and during the
nancial crisis is helpful in providing benchmark results on how exports affect AD
petitions. The PRC is chosen for being the main target of AD petitions, which quite
naturally follows from its position as the world’s largest exporter. During the global
nancial crisis, particularly during the world economic slump, the lling of AD petitions
is likely to be more prevalent as governments use it to insulate domestic rms from
import competition (Hillberry and McCalman, 2011;Georgiadis and Gräb, 2013).
This paper contributes to the literature on determinants of AD petitions by further
conrming that export volume is a quantitatively signicant factor in explaining AD
petitions. In addition, it uses a novel empirical strategy to identify the true causal effect
of export volume on AD petitions. There is a substantive literature that examines the
determinants of AD petitions. For example, Leidy (1997),Mah (2000),Knetter and Prusa
(2003),Feinberg (2005),Jallab et al. (2006) and Zhou and Cuyvers (2009) nd that
macroeconomic factors of the complainant country, such as real gross domestic product
(GDP) growth, unemployment rate and exchange rate uctuations, are important
determinants of AD petitions. On other hand, Finger (1993),Prusa (2001),Sanguinetti
and Bianchi (2005),Vandenbussche and Zanardi (2008) and Prusa and Skeath (2002)
investigate retaliation as a strategic motive for AD use. They nd that countries tend to
le AD petitions against those which have previously investigated them or currently
taking AD actions against them.
Focusing on the AD petitions against the PRC by its major trade partners at the
Harmonized System (HS) Code eight-digit level and the PRC’s exports at HS two-digit
level to its major trade partners, we construct within two-digit level variation three trade
costs as instruments for export volume. Using the two-stage least squares methodology, we
nd rising exports from the PRC is followed by signicant rise in AD petitions against the
country. Instrumental variable estimates indicate that following a 1 percentage point
increase in the PRC’s export volume raises the number of AD petition by about 0.25
percentage points, and the probability of facing AD petition by 3.5 per cent. These estimates
are ten times larger than found in ordinary least square regressions.
The remainder of the paper is structured as follows. Section 2 discusses the data and
methodology used, specically some stylized facts on AD petitions against the PRC
195
Anti-dumping
petitions and
exports
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