G-MonD Note n°14

Using incomplete VAT rebates to promote exports: evidence from China during the global crisis

G-MonD Note n°14 - May 2015
Authors: Julien Gourdon, Laura Hering, Stéphanie Monjon and Sandra Poncet.
Abstract:

Compared to most developed countries, China’s value-added tax (VAT) system is not neutral and makes it less advantageous to export a product than to sell it domestically. However, the large and frequent changes to the VAT refunds which are offered to exporters have led China to be accused of providing its firms with an unfair advantage in global trade. In this article, the authors use city-specific export quantity data at the HS6-product level over the 2003-12 period to assess how changes in these VAT rebates have affected Chinese export performance. They find that changes in VAT rebates have significant export repercussions.

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