| My dissertation theoretically and empirically studies the impacts of trade liberalization to a country and uses China as a case study.; In Chapter 1, I analyze China's committed tariff rates at the entry of WTO using a political economy approach. I consider a model where the central government chooses an optimal tariff rate so as to maximize the weighted sum of consumer welfare, profits of SOEs, profits of multinationals, and the tariff revenue from the imported goods. Results show that the Chinese government assigns a larger political weight on the SOE profit than on consumer welfare. Furthermore, both weights diminish over time, with the latter dropping at a faster speed. This indicates that although the Chinese government reduces its interference with the economic opening, it still favors the SOEs over consumer income.; Chapter 2 answers the question whether China experienced regional specialization with its twenty years of opening to trade. I calculate the Gini coefficients of specialization for coastal and interior China, using Chinese trade data at the commodity level. Instead of the monotonic relationship found in previous literature, China's regional specialization follows a U-shaped pattern: both the interior and coastal regions diversify from 1988 to 1994, but specialize during the later reform period of 1994--2003. To explain this observation, a theory of tariff reductions is proposed by building the Dornbusch-Fischer-Samuelson continuum of goods Ricardian model in a setup of two countries and three regions. This U-shaped pattern of specialization is obtained from foreign tariff reductions followed by Chinese tariff reductions. The model is supported by numeric simulations and matches the timing of the Chinese and U.S. trade liberalizations.; Chapter 3 analyzes the unit values in international trade with respect to a country's capacity to export. The change in product unit values is decomposed into the components associated with pure term-of-trade effect, quality effect, distance effect, and production cost effect. Results confirm that tariff, distance, and wages all significantly affect the unit values. Furthermore, exporters increase unit price to distant trading partners through quality upgrading. This "Washington apple effect" is much larger than the pure distance effect or production cost increase. |
