The Impact Of Trade Policy Uncertainty On Enterprise Productivity

Since China joined the World Trade Organization(WTO),the trade relations between China and the United States have been rapidly alleviated and the trade volume grows steadily.According to UN statistics,China's exports to the United States increased from 100 billion U.S.dollars to 563.2 billion U.S.dollars between 2000 and 2018,exports increased by approximately 463.2%.During this period,United States exports to China increased from 16.19 billion U.S.dollars to 120.15 billion U.S.dollars,an increase of about 642.34%.Since 2018,trade frictions between China and the United States have continued to escalate,causing huge losses to the economies of the two countries.According to General Customs Administration of People's Republic of China statistics,China's exports,which were subject to tariffs in the first quarter of 2019,fell by about 12 billion U.S.dollars from the previous year.The Sino-US trade frictions has not only affected the economies of the two countries,but also hurt the trade relationship between China and the United States.For China's enterprises,it is difficult to find other alternative markets in a short time to ease the pressure on inventory,and the enterprise productivity will be greatly affected.At the stage of the prevalence of trade protectionism,trade policy uncertainty(TPU)is a relatively new research direction in the near future,and it is of great practical significance to explore its impact on microeconomic indicators including enterprise productivity.The main work and conclusions of this paper include the following six aspects:(1)This paper analyzes the impact mechanism of trade policy uncertainty on the productivity of enterprises from the theoretical perspective.The decline of TPU after joining the WTO mainly improves the productivity of enterprises through the “competitive incentive effect” and “export learning effect”.Then,this paper uses Baron and Kenny(1986)to construct a mediating effect model to test the impact mechanism.(2)Based on the combined non-balanced panel data of China's industrial enterprise database and customs database from 2000 to 2013,this paper draws on the experience of Handley and Lim?o(2013)and Feng(2014)?Pierce and Scortt(2016)respectively to measure the TPU after China's accession to the WTO.And the productivity of the enterprise was measured in three ways: ACF,LP,and OP.On this basis,the development status of trade policy uncertainty and the productivity of enterprises are analyzed.It is found that the trade policy uncertainty of trade countries has significant differences in the productivity of enterprises.(3)The new,new trade theory makes a systematic introduction to the heterogeneity of enterprises.Based on this theory,this paper studies the impact of the decline of TPU on the productivity of enterprises before and after entering the WTO from different ownership systems and trade modes.The study found that state-owned enterprises and foreign-invested enterprises are more resilient to the decline in TPU than private enterprises,and general trade is more rapid than processing trade.(4)After a trade policy is implemented,it takes a long time for companies to adjust their productivity.This paper divided 2000-2013 into four different time periods to test the difference of enterprises' productivity response to TPU decline after China's entry into WTO.It is found that with the increase of the number of years of WTO accession,the productivity of enterprises is more resilient to the decline of TPU.(5)Considering that the US trade environment changes every year,this paper incorporated the actual import tariff of the United States on Chinese products into the model,and added the interaction between tariff and TPU to study the impact of the decline of TPU on enterprise productivity under different trade environment of the United States before and after China's accession to the WTO.The results show that the decline of TPU in a free trade environment can better bring about an increase in business productivity.(6)In order to more deeply study the sources of growth in enterprise productivity,this paper uses the Dynamic Olley-Pakes decomposition method(DOP)to decompose the productivity of enterprises,which is mainly divided into enterprise growth effects(the sum of in-group effect effect and inter-group effect)and net entry effect(the difference between entry effect and exit effect).The study finds that the increase in productivity caused by the decline in TPU is mainly due to the growth effect of enterprises.From the sources of growth,the impact of market resource allocation on firm productivity(inter-group effect)is greater than the impact of enterprise's own productivity change(in-group effect).The entry effect is greater than the exit effect of the enterprise.Overall,the growth effect of enterprises is far greater than the net entry effect of enterprises.Based on the above analysis,this paper mainly proposes several suggestions at the government and the enterprise level.Firstly,the Chinese and American governments should establish a bilateral consultation mechanism to conduct consultations and negotiations on an equal and friendly basis.Secondly,the government should grant certain subsidies to export enterprises,encourage them to innovate,and explore diversified export markets to diversify export risks.Finally,the enterprise itself should improve its independent research and development capabilities,increase product added value,and establish and improve an enterprise early warning mechanism to flexibly adjust its production and operation decisions.