Different Types of Firms, Products, and Directions of Trade: The Case of the People’s Republic of China

Abstract

Using highly disaggregated, Harmonized System (HS) 8-digit, product-category level data collected by the People’s Republic of China’s (PRC) Customs Office for 2000 and 2008, we perform an in-depth anatomy of the PRC's trade in manufactured goods. First, we distinguish between foreign firms and domestic firms, with the latter further divided into private firms and public firms. Second, we distinguish products as either final goods or intermediate goods. Third, we look at not only the PRC's exports but also its imports, and test for the relative importance of the extensive margin—number of goods—versus the intensive margin—the amount traded per good. Fourth, we estimate gravity equations from the perspective of dynamics utilizing a dynamic adjustment model. Overall, our analysis yields a number of new stylized facts and generates some interesting puzzles about the PRC's exports and imports.