Tax System Reform And Export Dynamics Of Chinese Manufacturing Enterprises

Export is one of the troika for C hinese economic growth,its stability is of great significance for the long-term growth of the C hinese economy.As for the dynamic transformation of export firms,is something that’s indispensable for the effective allocation of China’s economic resources.For a long time,in order to stabilize the economic growth and to effectively allocate resources of export firms,the Chinese government has took various tax policies and achieved good results.However,there are few related studies on how these tax policies affect and to what extent the firm dynamic adjustments that has been affected.The study of how these tax policies affect export growth and dynamic adjustment of Chinese export firm is of great practical significance for the formulation and reform of the tax and export policies.At the same time,the research on finance and trade in international trade field has mostly focused on export tax rebates and export subsidies,and little on the impact of other tax policies on trade.Therefore,how the other tax policies affect trade,especially the export behavior of enterprises,also has important theoretical implication.This thesis takes the value-added tax and corporate income tax,the two largest taxation systems in C hina for example,examines how changes in these two types of tax policies affect the dynamic adjustment of Chinese manufacturing export enterprises.The results show that both the reduction of value-added tax and corporate income tax affect the dynamic adjustment of corporate exports.Specifically,this paper finds:(1)The reduction of value-added tax will reduce the entry and exit rate of enterprises in the export market,and at the same time have a significant positive impact on the net entry rate;(2)The reduction of both value-added tax and corporate income tax will reduce the export survival risk and extend the duration of corporate exports;(3)The reduction of corporate income tax will promote the conversion of corporate exports to core and high-tech products;(4)The reduction of both value-added tax and corporate income tax will improved the industrial resource allocation efficiency;(5)The economic effects of the reduction of both value-added tax and corporate income tax indicates that these two types of tax policy reforms have achieved their reform objectives and are consistent with economic principles.This paper consists of 10 chapters.The main contents and acade mic contributions of each parts are summarized as follows.Chapter 1 introduces the relevant theories and empirical research literature of tax and trade,defines the research content of this paper,and introduces the basic structure,innovation and academic contribution.Chapter 2 briefly introduces the course of C hina’s financial and tax system reform,the process,content and actual tax reduction effect of the value-added tax and enterprise income tax reform.Chapter 3 constructs the theoretical model.Based on the classic Melitz model in the theory of heterogeneous enterprise trade,the paper introduces value-added tax and enterprise income tax,constructing a heuristic model to investigate the impact of value-added tax and enterprise income tax on the export behavior of enterprises.And he model is simulated under the assumption of specific parameters to investigate the influence of the change of corporate income tax on the export behavior of enterprisesChapters 4-6 studies the impact of corporate value-added tax on corporate export dynamics from the perspective of the entry and exit the export market,the duration of corporate exports,and the duration of corporate-product exports,respectively.Since enterprises entering and exiting the export market r eflect the allocation of resources between exporting and non-exporting enterprises.Based on the industrial export entry and exit rates,using the data of C hina’s industrial enterprises and C hina’s urban statistical yearbook data from 1998 to 2007,taking the value-added tax reform incidents in the three provinces of Northeast C hina in2004 as a policy shock,adopting a difference in difference method,Chapter 4examines the impact of value-added tax on corporate export dynamics.The empirical results show that the 2004 VAT transition pilot policy significantly reduced the average industrial export entry and exit rate,but had a significant positive impact on average industrial net export entry rate.that is,the VAT reform effectively promotes the industry’ s average net export entry rate,thereby improves the efficiency of resource allocation.The mechanism analysis shows that the value-added tax transformation policy has reduced the export exits of enterprises and suppressed the entry of exports by promoting R & D innovation and strengthening the concentration of the industry,which has reduced the average export entry rate and exit rate of the industry.These results imply that the typical tax reduction policy such as value-added tax reform will significantly affect the firm export dynamics and help to improve the efficiency of resource al ocation.Chapter 4 may be the first to examine the impact of C hina’s VAT reform on the firm’s export entry and exit.In terms of research content,compared with previous studies,this chapter considers more policy shocks on the basis of benchmark results,and uses a variety of estimation methods to enhance the robustness of the baseline.From the perspective of influence channels,this chapter not only quantitatively analyzes the impact of VAT reform on the export dynamics of enterprises,but also proposes and examines two channels in which the VAT reform affects the industry’s average export entry and exit rate.The research results in this chapter show that the typical tax reduction policy based on VAT reform is not only effective for domestic enterprises,but also has a significant effect on improving the living environment of exporting enterprises.Chapter 5 examines the impact of value-added tax on enterprises’ export duration.From the perspective of the duration of export of enterprises,based on the data of China Industrial Enterprise Database and China C ity Statistical Yearbook from 1998 to 2013,taking the 2004 VAT transition pilot policy as a quasi-natural experiment,and the difference in difference and cloglog model are used to investigate the effect.The empirical results find that the value-added tax reform significantly reduced the export risks of enterprises and effectively increased the duration of export.The results of the mechanism inspection show that the value-added tax reform improves enterprise performance by promoting investment in fixed assets,thereby reducing the risk of export exit and prolonging the export duration of enterprises.These results mea n that the reduction of value-added tax will help to improve the export competitiveness of enterprises,stabilize corporate exports,and thus stabilize the country’s export growth.Chapter 6 examines the impact of corporate VAT reductions on the dynamics of corporate-HS 8-digit product exports.From the perspective of the export duration of the enterprise-HS 8-digit product,based on the matching data of the China Industrial Enterprise Database and the C hina C ustoms Import and Export Statistics Database fro m 1998 to 2013,combining the World Bank ’s World Development Indicator data and CEPII ’s bilateral gravity data,taking the 2004 VAT transition pilot policy as a quasi-natural experiment and adopting the difference in difference and cloglog method,this chapter investigate the effect.The empirical results find that the value-added tax reform significantly reduced the export risk of enterprise-HS 8-digit products and effectively improved the export duration of enterprise-HS 8-digit products.The results of the mechanism inspection show that the value-added tax reform improves corporate performance by promoting the fixed asset investment,thereby reducing the export exit risk of enterprise-HS 8-digit products and extending the export duration of enterprise-HS8-digit products.The academic contributions of C hapters 5 and C hapters 6 are as follows:From a research perspective,the content of these two chapters may be the first one that examines the impact of VAT reform on the duration of corporate exports and the duration of corporate-product exports from a tax perspective.In the existing research,there are many studies on the factors affecting the export duration of enterprises,but few studies involve the impact of taxation.In terms of research methods,the two chapters use the double difference method to identify policy effects,and then use the survival analysis method to make empirical estimates,which not only alleviates the endogenous problems to a certain extent,but also more effectively estimates the survival time of the enterprise,making the estimation results more accurate.From the research results,the empirical results of the contents of these two chapters confirm the positive effect of VAT reform on the export duration of enterprises and enterprises-products,indicating that tax policy,as an important tool for macro-control,plays an important role in regulating corporate behavior and stabilizing exports.Therefore the research in these two chapters has profound policy implications.Chapter 7,from the perspective of the duration of enterprise exports,based on the data of China Industrial Enterprise Database and China C ity Statistical Yearbook from 1998 to 2013,taking the 2008 corporate income tax reform policy as a quasi-natural experiment,and adopting the double differential and cloglog model,examines the impact of corporate income tax on corporate exports Dynamic effects.The empirical results found that the reform of corporate income tax has significantly reduced the export risks of enterprises and effectively improved the duration of corporate exports.The results of the mechanism inspection show that the corporate income tax reform has reduced the risk of export exit and prolonged the export duration of the enterprise by promoting the fixed asset investment and improving labor productivity.These results mean that,similar to the corporate value-added tax reform,the corporate income tax reduction brought about by the tax reform will also help to improve the export competitiveness of enterprises,stabilize corporate exports,and then stabilize the country’s export growth.Chapter 8,from the perspective of export duration of enterprise-HS 8-digit products-destination country,based on the matching data of China Industrial Enterprise Database and C hina Customs Import and Export Statistics Database matching data from 1998 to 2013,combining World Bank’s World Development Indicator data and CEPII’s bilateral gravity Data,using the 2008 corporate income tax reform policy as a quasi-natural test,using a double-difference and cloglog model,examines the impact of corporate income tax reduction on corporate export dynamics.The empirical results found that corporate income tax reform significantly reduced the export risk of the enterprise-product-destination country and improved the export duration of the enterprise-product-destination country.The results of the mechanism inspection show that the corporate income tax reform can reduce the exit risk of enterprises-products-destination countries by promoting investment in fixed assets and increas ing the labor productivity of enterprises,and extend the duration of exports of enterprises-products-destination countries.Chapters 7 and chapters 8 invistigate the effects of corporate income tax on the export duration of enterprises and enterprises-products-destination countries,with the following theoretical and practical contributions.First,the two chapters may be the first literature on the impact of corporate income tax on the export duration of firms and firms-products-destination countries.The relationship between taxation and trade is an important research topic in international trade.However,most of the studies in the literature have focused on the issue of how export tax refunds,that is,domestic VAT refunds to exporting companies,affect the export performance of enterprises,and rarely examine how corporate income tax changes affect corporate export performance,and how corporate income taxes affect corporate export stability,less research on how corporate income tax affects firm export stability and long-term export competitiveness.The research in this chapter enriches the research literature on taxation and trade,and also provides a new perspective for the study of factors affecting the duration of exports.Second,these two chapters have obtained rich results on the impact of corporate income tax on the export duration of enterprises and corporate-product-destination countries.These results demonstrate that the reform of corporate income tax in2008 can better achieve the reform goals.Specifically,the fair tax burden environment caused by corporate income tax reform can well promote regional balanced development and the growth of export competitiveness(export duration)of domestic-funded enterprises and small and medium-sized enterprises.This provides empirical support for the rationality and performance of the "industry priority,regional supplement" principle of the 2008 corporate income tax reform,and has important reference meaning for the further reform of national corporate income tax.Chapter 9,from the perspective of the conversion of export products of enterprises,based on the matching data of the C hina Industrial Enterprise Annual Census Database and C hina C ustoms Import and Export Statistics Database from2000 to 2013,combined with the data of the "C hina C ity Statistical Yearbook",using the corporate income tax reform in 2008 as a quasi-natural experiment,adopting the double difference method,empirically analyzes the impact of the2008 corporate income tax reform on the dynamic adjustment of Chinese manufacturing enterprises’ export products.The adjustment of the export products of enterprises concerned in this chapter mainly includes the scope of export products,the concentration of export products,the share of export core products,and the share of export high-tech products.The research results show that the 2008 corporate income tax reform has expanded the scope of export products,increased the concentration of export products,and increased the share of export core products and high-tech products.Moreover,this impact is heterogeneous in terms of region,trade mode,industry,and enterprise size.This chapter also examines that the impact of the 2008 corporate income tax reform on the adjustment of export products of enterprises was mainly achieved through the two channels of increasing enterprise labor productivity and increasing the accumulation of fixed assets.The research in Chapter 9 has the following contributions.From the perspective of research,this chapter is the first document to examine how corporate income tax affects the dynamic adjustment of export products of enterprises,and enriches related research on export behavior and dynamic adjustment of products by multi-product enterprises.In terms of research method,this chapter uses the double difference method for empirical analysis and adopts the quasi-natural experiment of the 2008 corporate income tax reform,which effectively avoids possible endogenous problems.In terms of research content,this chapter systematically and comprehensively analyzes the impact of the 2008 corporate income tax reform on the scope of export products,the concentration of export products,the export of core products,and the export of high-tech products.It also examines the heterogeneity effects of regions,trade methods,industries,and enterprise scale.In terms of the mechanism,the research in this chapter finds that the impact of the 2008 corporate income ta x reform on the adjustment of export products of enterprises was mainly achieved through the two channels of increasing enterprise labor productivity and increasing enterprise fixed asset accumulation.Chapter 10 summarizes the main research content and re sults of this thesis,and elaborates its policy implications for the formation and regulation of the export growth policy,value-added tax policy and corporate income tax policy.Overall,this paper has three contributions.First,this article gives a heuristic model for examining the impact of value-added tax and corporate income tax on corporate export behavior,and further introduces the corporate income tax to the general equilibrium model of classic Melitz heterogeneous corporate trade,thus a general equilibrium model is given to analyze the impact of corporate income tax on firm behavior and state welfare.Further,under certain parameters,this paper simulates and analyzes the impact of tax reductions and competitive tax reductions on corporate trade behavior and national welfare.This model can also be easily incorporated into VAT and extended to dynamic situations.Second,this article takes corporate value-added tax and corporate income tax as examples,and examines the mechanism,channels of the tax system reform on the export dynamics of C hinese manufacturing enterprises from three aspects:export entry and exit dynamics,export duration,and export product adjustment dynamics,which largely enriched the literature on finance and trade.At present,domestic and foreign research on finance and trade is mainly focused on export tax rebates or export subsidies.There is little research on tax system and trade.Even if there have been a few recent studies on the impact of corporate income tax or value added tax on corporate export behavior,it is from the perspective of static export behavior.This article examines the impact of the tax system on the entry and exit of enterprises from the dynamic perspective,and draws a series of conclusions.However,research in this area is basically blank.Therefore,the research in this article is an important supplement to the financial and trade literature,and has important academic significance for advancing academic research on finance and international trade.Third,the research in this article provides important empirical support for further reform of value-added tax and corporate income tax policies,and even other tax system reforms,and provides theoretical and empirical support for related policy formulation.This article has obtained a series of conclusions about value-added tax and corporate income tax on enterprises entering and exiting the export market,the duration of corporate exports,the duration of corporate-product-destination country exports,a nd the dynamic adjustment of corporate export products.This article finds:(1)The reduction of Value-added tax has reduced the ratio of enterprises entering and exiting the export market,increasing the net entry rate of enterprises in the export market,and improving the efficiency of market resource allocation;(2)Both value-added tax and corporate income tax have reduced the export survival risk of enterprises and prolonged the duration of corporate exports,especially corporate income tax,has also e xtended the export duration of corporate-product-destination countries;(3)The reduction of corporate income tax has helped to promote the conversion of corporate exports to core products and to high-tech products;(4)The economic effects of value-added tax and corporate income tax reductions indicate that these two types of tax policy reforms have achieved their reform objectives and are in line with economic principles.This article also extends and deepens these conclusions from the perspective of regional,industry,export product and export destination heterogeneity.This series of conclusions has not been seen in the literature.Therefore,the research in this article evaluates the economic effects of the value-added tax and corporate income tax policy reforms and their channels of action,and demonstrates that the two tax reforms have achieved their objectives and their economic rationality,thereby providing important academic support for the deeper reform of value-added tax and corporate income tax and even other tax system.