Date
2014
Ville de l'éditeur
Paris
Titre de la collection
CEPII working paper
n° dans la collection
2014
Indexation documentaire
Economie internationale
Subject
China; VAT system; Export performance; Export tax
Code JEL
F.F1.F10; F.F1.F14; O.O1.O14
Auteur
Gourdon, Julien
status unknown
Monjon, Stéphanie
status unknown
Poncet, Sandra
status unknown
Type
Document de travail / Working paper
Nombre de pages du document
40
Résumé en anglais
During the last decade, the Chinese government has frequently changed the value added tax (VAT) refund levels offered to exporters. Indeed, China’s VAT system is not neutral, in particular because the exporters may not receive complete refund of the domestic VAT paid on their inputs. This paper investigates how changes in the VAT rebates affect export performance in China. Our empirical analysis relies on export volume data at the HS6 product level over the 2003-12 period. To address potential endogeneity, we exploit an eligibility rule that disqualifies processingtrade with supplied materials from the rebates. We find that the adjustments to the VAT rebates have significant repercussions on the exported volume: a one percentage point increase in the VAT rebate can lead to a 7% increase in export volumes. This magnitude allows to better understand the strong resistance of China’s exports amid the global recession.