External Economic and Trade Shocks,Domestic Factor Mobility and China's Economic Growth
Smoothing out domestic circulation is a strategic choice for China to create new advantages for high-level opening-up and promote high-quality economic development.In the face of an increasingly complex and unstable exter-nal trade and economic environment,fully considering the domestic factor mobility has become especially crucial for comprehensively assessing the impact of external economic and trade on China's economic growth.Against this back-drop,this paper quantitatively assesses the impact of China-US tariff fluctuations since 2018,widely viewed as the most significant bilateral trade dispute in the past 30 years,on China's economic growth.Theoretically,we construct a spatial general equilibrium model with multiple countries and sectors.The model incor-porates input-output linkages,economies of scale,internal and international trade,and migration across regions and sec-tors to demonstrate how tariff fluctuations affect economic growth,with a special focus on the importance of internal mar-ket factor frictions in these effects.We calibrate the parameters using datasets including the World Input-Output Database(WIOD),Chinese census data,and Chinese provincial input-output tables.Our analyses show that the imposition of additional tariffs would have a negative impact on China's real GDP,with a magnitude ranging from-0.194％to-0.321％.However,this negative impact would be significantly underestimated with-out taking into account the input-output linkages and labor mobility across regions.These findings remain robust under a series of robustness tests,including different theoretical settings,alternative parameters and various methods for calculat-ing the imposition of additional tariffs.Moreover,we distinguish the negative impact of external economic shocks on wel-fare and real GDP and point out that using the conclusion about the impact of the welfare level may lead to an incorrect estimation of the effects of external economic shocks on the Chinese economy.We find that heterogeneity in the effects varies across regions and industries:some regions and industries benefit from the tariff fluctuations,while others suffer adverse consequences.Overall,regions or industries more engaged in downstream production,with greater dependence on trade with the United States,and with larger net labor outflows expe-rience more significant negative impacts on their real GDP.In addition,counterfactual analyses show that among the policy mixes,reducing domestic trade barriers and speeding up technology progress are the two most effective counter-measures to resist negative external shocks and enhance economic growth.This paper contributes to the recent literature on the linkage between foreign trade policy and domestic market fric-tions in developing countries(e.g.,labor market frictions).Existing studies focus on the welfare effect of trade liberaliza-tion(Liu & Ma,2023;Bai et al.,2023),while our study fills in this gap by centering on the effect of trade frictions.In par-ticular,we find that overlooking labor mobility across regions would substantially underestimate the impact of the imposi-tion of additional tariffs on China's economic growth.Moreover,we evaluate how the effects of the imposition of addi-tional tariffs transmit across different industries and regions,which further enriches the vast literature on the China-US trade friction.This study has several important policy implications.First,to promote steady global economic growth,governments should strengthen communication and cooperation to peacefully resolve trade disputes.Second,because industrial poli-cies should align with regional strategies,it is necessary to consider the unique characteristics of different regions when making policy decisions.Third,to ensure that high-level openness to the world can boost economic development,it is es-sential to leverage the large domestic market and ensure a smooth flow of resources between international and domestic markets.Fourth,to handle trade shocks and promote stable growth,it is crucial to drive industrial upgrades through tech-nological innovation.Finally,a coordinated approach should be taken to implement various policies together,maximizing their effectiveness and mitigating negative impacts from external economic shocks to facilitate both domestic and interna-tional economic activities.
External Economic and Trade ShocksDomestic Factor MobilityIntegration of Domestic and Foreign TradeEconomic Growth
NETL
NSTL
万方数据
