Journal Article

Beyond dollar exchange-rate targeting: China’s crisis-era export management regime

Simon J. Evenett, Johannes Fritz and Yang Chun Jing

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 28, issue 2, pages 284-300
Published in print January 2012 | ISSN: 0266-903X
Published online June 2012 | e-ISSN: 1460-2121 | DOI: https://dx.doi.org/10.1093/oxrep/grs016
Beyond dollar exchange-rate targeting: China’s crisis-era export management regime

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During the crisis era, while considerable attention was given to Chinese management of its currency’s exchange rate with the US dollar, the frequent alteration of rebates on value-added taxes (VAT) paid by exporters on the inputs they have imported has been overlooked. In this paper the relevant Chinese policy changes are documented and evidence presented to gauge the relative importance of what turns out to be a systematic form of export management. Given the relatively high shares of imported content used in Chinese exports and the low profit margins of Chinese exporters, an increase in the VAT rebate of a single per cent is estimated to increase the profitability of beneficiary exporters by 12 per cent for the typical Chinese exporter, and by 18 per cent for those Chinese exporters operating in export processing zones.

Keywords: export incentives; export management; China; F13; H25

Journal Article.  7376 words.  Illustrated.

Subjects: International Trade ; Taxation, Subsidies, and Revenue

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