A Study On The Causes And Effects Of Anti-dumping Investigation Against China

China has joined the World Trade Organization(WTO)in 2001.After that,China has experienced a rapid expansion of international trade,which drove the economic growth of China.Sixteen years later,China has become the second largest economy and the largest trading country in the world.However,with weaker recovery of world economy,and slower growth of international trade,a lot of countries used trade remedy measures,such as anti-dumping to protect their industries and reduce the impact of the expansion of China’s export on domestic market.Since the year WTO established,China has became the most frequently targeted country for 20 years,which seriously hindered the development of China’s international trade.China’s economy is facing enormous challenges.In this context,it is necessary to study the issues on the trade remedy measures,especially on anti-dumping duties against China.In this study,combing with several large micro-and macro-databases,we construct four unique samples based on the Temporary Trade Barriers Database published by World Bank(Bown,2016),which include(i)1995-2015 country level panel data,(ii)1995-2013 country-industry level panel data,(iii)2000-2006 firm-product level panel data,and(iv)2000-2006 firm level data.Using the statistical analysis and econometric methods,we explore the causes and the effects of trade remedy measures by taking anti-dumping investigation against China as an example.To our best knowledge,this study is the first paper to look at the impact of anti-dumping investigations(or anti-dumping duties)on product spillovers and firm innovations.In particular,in this paper we investigate the effects of anti-dumping duties on the export of other products by firms affected by anti-dumping duties at firm-product level,and discuss the impact of anti-dumping on firm’s patent applications at firm level.Taking all the countries which had initiated an anti-dumping investigation before as our cases,we also try to answer what caused anti-dumping investigations at macro-level,which include economic factors,political factors and law factors.First of all,we investigate the motivation of initiating an anti-dumping investigation at country level and industry level respectively.We find that a country’s anti-dumping investigation decision mainly affected by the trade deficit with China,the competition with China and the "Non-market Economic Status" of China.Moreover,China’s accession to the WTO might strengthen the effects of competition with China.Meanwhile,an anti-dumping investigation of an industry against China mainly caused by the decrease of labor productivity,the decline of average output,the increase of export from China and trade deficit with China.These results vary from high income level countries to low-median income level countries.We also introduce several robustness checks and an instrument variable,our results still remained.They are consistent with our expectations.Next,based on DID method,we use firm-product level data during 2000-2006 to explore the effects of US anti-dumping duties against Chinese multiproduct producers.Importantly,we investigate the effect of US anti-dumping duties on the exports of other products(products that were not involved in the anti-dumping investigation themselves)by firms affected by US anti-dumping duties.We find that US anti-dumping duties lead to an increase of 6.9%-9.1%in Chinese exports of non-targeted products to the US by producers affected by the US anti-dumping duties.We also looking at the quantities directly,we find a similar increase of about 5.4%-7.8%.Note that the results do not seem to be driven by an increase in prices,and related to whether the country was one of firm’s original export channels.We find heterogeneity across multi-sector firms and single sector firms,as well as across firm ownership types.These results give us confidence that in response to a negative shock,Chinese exporters can responded quickly by expanding their exports of alternative products,i.e.,there might exist product spillover effects.Then,we also use DID method to discuss the impact of anti-dumping investigation(or measure)on firm’s innovation.We find that firm’s non-invention patent significant increase after anti-dumping investigation or anti-dumping measure imposed,while the number of total patent applications also increase by 0.66%after anti-dumping measure imposed.We only find similar effects within foreign owned enterprises,state owned enterprises,as well as the firms in industries which were frequently targeted.We cannot find any significant results in private owned enterprises or low-frequently targeted industries.This provides the evidence for the impacts of anti-dumping on firm’s innovation,which might help us introduce policy suggestions to reduce the negative impact of anti-dumping.We make a conclude at the end.We introduce three policy recommendations to help government and firms have a better understanding on anti-dumping investigation.We also give some suggestions on what are better countermeasures to anti-dumping investigation.First,government could introduce an "alert system" of anti-dumping investigation,and should understand the important of "Market Economy Status" in anti-dumping investigations.Second,government could develop the economic and trade cooperation between countries,such as bilateral or multilateral trade agreements to reduce the negative impacts of anti-dumping investigation.Third,the government should encourage firms to use innovations as their countermeasures of anti-dumping investigations,which can avoid the "Price war" by exporting new products.