Has the Decline in Trade Policy Uncertainty Promoted China’s Agricultural Exports?

Abstract

This article describes China’s entry into the World Trade Organization (WTO) as a quasi-natural experiment based on samples from the World Bank database, China Customs database, and China Industrial Enterprise Database from 2000 to 2007 and uses the difference-in-difference (DID) method to investigate the effect of trade policy uncertainty (TPU) on China’s agricultural exports. The study found that, first, a decline in TPU significantly increases the export volume of Chinese agricultural firms. Second, the decline in TPU significantly boosts companies engaged in general trade. Regarding export destination countries, the decline in TPU significantly promotes the agricultural firms whose export destination countries are developing countries. Regarding firms’ ownership, the promotion of agricultural exports by non-state-owned enterprises (non-SOEs) and Hong Kong-, Macao- and Taiwan-funded enterprises is even more pronounced. Third, the decline in TPU promotes the export of Chinese agricultural firms by alleviating their financing constraints. The study provides new explanations for changes in China’s agricultural exports and enriches research on the evaluation of TPU effects.