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on China |
| By: | Rombach, Philipp |
| Abstract: | The United States has accused China of conducting secret nuclear weapons tests in violation of international norms and testing moratoria. Because of its comparatively limited historical testing record, China has strong incentives to obtain additional test data for the modernization of its nuclear weapons programme. Thus, it would be disadvantageous for Washington to respond by resuming underground nuclear testing, as Russia and China would benefit more from the erosion of international testing norms. For their part, Germany and Europe can take only limited action by promoting greater transparency and confidence-building measures. |
| Keywords: | China, Russia, United States, nuclear test, nuclear weapon, Threshold Test Ban Treaty (TTBT), Comprehensive Nuclear-Test-Ban Treaty (CTBT), One-Point Safety, National Nuclear Security Administration (NNSA), NNSA Stockpile Stewardship and Management Program |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:343134 |
| By: | Ting Chen (School of Business, Hong Kong Baptist University); Jianan Li (School of Economics, Xiamen University); Chong Pang (Barcelona School of Economics and Universitat Pompeu Fabra); Yuan Zi (Geneva Graduate Institute and CEPR) |
| Abstract: | Under what conditions can globalization become a source of state fragility? We provide the first systematic evidence that rigid trade and taxation systems, together with the collapse in global silver production following the Spanish American wars of independence, fueled rising silver prices and social instability in early nineteenth-century Qing China. Using newly assembled county-level panel data and historical commercial routes, we show that regions farther from Canton—the empire's sole legal international port—experienced larger increases in silver prices and greater social unrest following the shock. Silver-denominated taxation was central to this relationship: because taxes were largely fixed in silver terms, rising silver prices sharply increased real tax burdens and fueled instability. Quantitatively, the silver shock reduced China's aggregate welfare by 1.16 percent, with fiscal rigidity accounting for most of the loss. Opening additional international ports would have mitigated the destabilizing effects of the shock, but only modestly. By contrast, fiscal reform would have been far more effective. |
| Keywords: | Trade Costs; Silver Shock; Fiscal Capacity; Social Unrest; Chinese Economy |
| JEL: | L52 F13 R38 |
| Date: | 2026–09–07 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp24-2026 |
| By: | Mert Geyiktepe; Dani Rodrik |
| Abstract: | Using text-as-data methods, we quantify the U.S. discourse on China, place it in historical perspective, and compare its evolution across different sources of public narrative. Our analysis is based on a large corpus of materials drawn from public records (presidential and congressional records, newspaper articles, social media, think tank reports). We develop two measures of narrative discourse: an indicator of the frequency with which China is covered and a proxy for how positively or negatively China is presented. We document a sustained decline in net sentiment towards China in presidential sources since the early 2000s, predating Donald Trump’s first term in office. In contrast to presidential documents, congressional, news media, social media, and think tank sources exhibit persistent negative sentiment towards China even in decades prior to the 2000s. Instead of a deterioration in sentiment across the board, what we find is a convergence in presidential sentiment to other sources of narrative discourse. We find no evidence that presidential leadership has played a significant role in setting the narrative tone for the nation as a whole. Historical and shorter-term evidence both point to a bottom-up process of diffusion of narratives, rather than top-down diffusion. |
| JEL: | F5 P0 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35539 |
| By: | Natalia Vechiu (UB - Université de Bordeaux, ESTIA - ESTIA - Institute of technology, ESTIA-Recherche - ESTIA - ESTIA - Institute of technology, CRET-LOG - Centre de Recherche sur le Transport et la Logistique - AMU - Aix Marseille Université); Manish Kumar Sharma (MIT-WPU - Dr. Vishwanath Karad MIT World Peace University [Pune], IIT Kharagpur - Indian Institute of Technology Kharagpur) |
| Abstract: | In this paper, we analyse the determinants of maritime connections, with a special focus on the importance of foreign direct investments (FDI) in improving maritime transportation networks and in restructuring them. We are also interested in how China, in particular, impacts countries' integration to global supply chains through maritime transportation. We work on a heterogeneous panel of bilateral maritime connections as measured by UNCTAD's bilateral liner shipping connectivity index, and we find that FDIs between two partner countries do not significantly impact their maritime connection. However, we do find that Chinese FDIs in countries concerned by the Belt and Road Initiative (BRI) reinforce bilateral maritime connections between countries, in general, be they BRI countries or not. The Chinese influence is also significant via their maritime presence: maritime connections between two countries are significantly higher when host countries have strong maritime ties to China. A deeper analysis through several interaction effects also shows the Chinese influence is conditional on host countries' attributes. For instance, a maritime connection with China is more beneficial to developing/poorer host countries, who see their connection to origin countries increase more as compared to developed/richer host countries. |
| Keywords: | foreign direct investment, gravity equations, maritime transportation |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05732203 |
| By: | Liu, ZY |
| Abstract: | This article examines the differences that have arisen among Han nationalism, Chinese nationalism, and international New Qing History in the 2020s concerning the interpretation of Qing history. It argues that the three narratives do not revolve merely around evaluations of the Qing, but respectively focus on questions of ethnic identity, imperial structure, and the historical continuity of the modern state. Han nationalism emphasizes ethnic hierarchy and historical rupture under Qing rule; New Qing History places the Qing within a comparative framework of Eurasian empires and stresses its multi-ethnic imperial character; Chinese nationalism emphasizes the Qing’s important role in the formation of modern China’s territory and national community. The article further points out that controversies surrounding the Qing in fact reflect different understandings within contemporary Chinese society of national identification, ethnic relations, and the allocation of resources. |
| Date: | 2026–08–29 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:3qexh_v1 |
| By: | Liu, ZY |
| Abstract: | This article is one of a series of papers examining Han nationalist ideology in China in the 2020s. It seeks to explore the phenomenon whereby discourse related to Han nationalism has increased in Chinese online space in recent years, yet has rarely been treated as an independent object of inquiry within China’s mainstream social-science research system. The article argues that this phenomenon does not simply stem from a lack of scholarly attention, but is related to the operating environment of Chinese social science. Analyzing academic tradition, research frameworks, academic norms, the functions of think tanks, and the situation of scholars, the article points out that Chinese social-science research has long been shaped by existing theoretical systems, modes of resource allocation, and traditions of policy research, making it relatively difficult for certain issues involving ethnic identity, historical memory, and identity competition to form independent research paths. The article further discusses the distance between theoretical systems and public discourse, and how this structure affects the explanatory capacity of Chinese social science with respect to social currents such as Han nationalism. The article does not attempt to provide statistical estimates of the scale or social support for Han nationalism in China; rather, it seeks to pose a question: when a social idea enters the space of public discussion, why does the existing academic system find it difficult to explain the phenomenon adequately? |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:asnbq_v1 |
| By: | Zhengyang Jiang |
| Abstract: | Does financial opening necessarily lead to currency internationalization? To study the competition between incumbent and rising powers under financial interdependence, we develop a model of asset demand with microfounded network effects. Search frictions with currency-specialized intermediaries generate distinct notions of liquidity at asset-market and currency-area levels, which jointly shape the trajectory of currency competition. In the U.S.-China context, China at early stages of financial development benefits from pooling its assets with the dollar area, which reinforces the status quo. As China's financial markets deepen, RMB issuance allows China to internalize network effects and erode the dollar's dominance, triggering a discrete shift toward fragmentation. This transition is further shaped by sanctions, financial repression, and third-country responses, highlighting how financial interdependence transforms cooperation into rivalry in the evolution of the international financial order. |
| JEL: | E42 F34 G15 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35541 |
| By: | Josh Lerner; Namrata Narain; Dimitris Papanikolaou; Amit Seru; Zunda Winston Xu |
| Abstract: | China’s technological progress in recent decades has been viewed with admiration, alarm, and (in some cases) doubt. To better understand the Chinese innovation ecosystem, we compile a dataset of almost 14 million domestic Chinese patent publications. We focus on the subset of critical technologies identified by the U.S. Department of Defense. Several surprising patterns emerge from the data: Chinese patenting is strongly associated with other measures of innovative progress; patents are not concentrated in corporate giants such as Huawei; universities have played a key role in innovation, much greater than state-owned enterprises or government-owned facilities; and fewer than one in ten Chinese critical technology patents involves an inventor with U.S. experience or training. Finally, using four text-based measures of patent quality, we show that the rise of Chinese patenting in critical technologies has not been associated with a decline in quality relative to the U.S. awards. |
| JEL: | O3 O53 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35551 |
| By: | Kaeppel, Katharina; Mo, Zhexun; Schröder, Carsten; Yang, Li |
| Abstract: | Can correcting large misperceptions about foreign economic exposure change preferences over economic integration? We study this question in a high-stakes setting, Chinese direct investment in Germany, with a survey experiment embedded in the German SocioEconomic Panel (N = 2, 365) and a comparative survey in China (N = 2, 000). Germans overestimate Chinese FDI more than 30-fold (perceived 33% vs. actual 1%) and evaluate it far less favorably than EU or US investment, while Chinese respondents view German FDI positively. We test the effects of three randomized interventions on attitudes: a factual correction and two narrative framings. Factual information improves stated perceptions of the economic benefits of Chinese FDI by about 0.2 standard deviations, positive narratives produce smaller gains, and negative narratives leave these perceptions unchanged, consistent with already-low baseline beliefs. Yet these changes in perceptions do not translate into changes in preferences over foreign investors. In conjoint choices between hypothetical investment proposals, Chinese investors are 40 percentage points less likely to be chosen than otherwise identical EU investors, and respondents require a Chinese acquirer to save about 40% more jobs than an EU or US acquirer before viewing the offers as equivalent; both estimates remain statistically unchanged across all treatment arms. These results demonstrate that brief informational interventions cannot reshape entrenched attitudes toward investment from geopolitically distant partners, though they can improve assessments of its instrumental benefits. |
| Keywords: | Foreign direct investment, Public opinion, Survey experiment, Misperceptions, Narrative framing, Conjoint analysis |
| JEL: | C93 D83 D91 F21 F50 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:343113 |
| By: | Liu, ZY |
| Abstract: | Taking the withdrawal of the 2026 film The Battle of Penghu as a point of entry, this article explores the rise of Han nationalist ideology within Chinese society in the 2020s, and the increasingly prominent divergences in orientation between it and the officially led “Chinese nationalism (state nationalism).” The article analyzes the institutional roots of Han nationalism during a period of economic zero-sum competition, its contestation of historical narratives in the sphere of popular culture, and its comprehensive deconstruction of the official discursive system on core issues such as the definition of the nation, historical orthodoxy, and territorial legality. |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:nmwqj_v1 |
| By: | Jeffery (Jinfan) Chang; Wei Xiong |
| Abstract: | This paper investigates why China’s recurrent credit expansions have coincided with persistently weak inflation. We argue that this pattern reflects the country’s production-oriented monetary regime. At the aggregate level, faster monetary-financial expansion temporarily raises PPI inflation but depresses it over longer horizons. At the sectoral level, liability growth among listed industrial firms is followed by weaker producer prices, lower profitability, higher leverage, rising inventories, and reduced capacity utilization. We also find asymmetric supply-chain transmission: downstream liability growth raises upstream PPI inflation, while upstream liability growth does not generate a corresponding downstream price response. These findings indicate that credit expansion in China tends to sustain production and balance sheets rather than stimulate final demand. As a result, monetary policy operates less as a conventional tool for demand management and durable reflation, and more as a mechanism for preserving production capacity and supporting growth. |
| JEL: | E5 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35562 |
| By: | Yang Yang; Sambit Bhattacharyya; Chirantan Chatterjee; Jiao Wang |
| Abstract: | We study the effect of Russia-China gas pipeline news shock on energy importer China. We demonstrate that the shock triggers an expectation induced current price increase likely through increased demand in gas futures contract. Using panel data covering 31 provinces, 19 industries, and 4, 603 households over the period 2010 to 2022, we find that the shock reduces income and consumption. At the province-year level, consumption falls more than income. At the industry-year-province level, the shock reduces wages overall. However, the effect appears to be heterogeneous across industries subject to their operational scale. At the household level, the effect of the shock is negative on income and statistically insignificant on consumption. However, the insignificant consumption effect is heterogeneous by income quantiles, with lower income households reducing consumption more sharply. The results appear robust to price-intensity treatment, placebo tests, and matching estimators. |
| Keywords: | energy news shocks, income, consumption, China |
| JEL: | D72 O11 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-74 |
| By: | Hugo Rojas-Romagosa; Gregor Schwerhoff; Sneha D Thube; Sha Yu |
| Abstract: | Solar and wind power account for a growing share of electricity generation in China and now dominate new capacity additions. As the power system transitions toward renewable generation, greater flexibility will be required to maintain system stability. This paper uses a computable general equilibrium model to assess the macroeconomic implications of this transition. Model results indicate a modest increase in electricity prices in the near-term, followed by sustained declines as renewable shares rise, particularly when variability is managed through battery storage rather than coal-fired backup generation. While the transition requires substantial adjustments in electricity supply and investment, it raises GDP in the long run and strengthens energy security. Battery-based flexibility outperforms continued reliance on coal across multiple dimensions, even when accounting for rising electricity demand from emerging technologies such as artificial intelligence. However, this transition pathway also increases the risk of stranded assets in the coal power sector. |
| Keywords: | China; Energy Transition; Renewable Energy; CGE models |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/185 |
| By: | Jingjing Chen; Jianlei Han; Shing-Yi Wang; Yongxiang Wang |
| Abstract: | This paper examines reforms in China’s imperial examination system during the Northern Song dynasty that anonymized exam submissions and ended local officials’ discretion to recommend candidates. Using prefecture-level data from 960–1127 and a difference-in-differences design, we compare areas with and without prominent elite families, where corruption and elite capture were more likely. The reforms increased the share of successful candidates from commoner backgrounds and narrowed their performance gaps with elites in scholarship and political achievement, indicating better selection of commoner talent. Treated prefectures also saw less social unrest. Overall, the reforms strengthened meritocracy, broadened political access, and promoted stability. |
| JEL: | D73 J45 N45 O15 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35531 |
| By: | Liu, ZY |
| Abstract: | This paper examines how the narrative of Zhonghua nationalism exerts influence over cultural production in contemporary China and analyzes its structural ramifications. Within film and television, specific historical themes are constrained from entering mainstream cultural production; in video games, certain historical factions are minimized or rendered entirely absent from narratives; in online literature, market mechanisms reflect historical preferences distinct from official state narratives through reader subscription behavior; in historical publications, ethnicity-inflected linguistic expressions from the past undergo textual revision; and within the Hanfu movement, Han culture is not directly suppressed but rather subsumed and repackaged within the overarching framework of "Zhonghua culture." |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:vx7u9_v1 |
| By: | Liu, ZY |
| Abstract: | This article examines the formation of modern Manchu identity and its relationship to Manchu–Han tensions within the context of Han nationalist discourse on the Chinese internet in the 2020s. It begins by analyzing the Qing Eight Banner system, arguing that the banners were not a single-ethnicity organization in the modern sense, but a political and social system composed of multiple identity groups including Manchu, Mongol, Han-martial (Hanjun), and bondservant (baoyi) populations. After the fall of the Qing, the former banner affiliation was gradually reorganized within the modern ethnic classification system, producing the Manchu identity of today. The article further discusses the process of reconstituting modern Manchu identity since the 1980s, contending that this process involves both historical continuity and the influence of ethnic policy, local administrative factors, and practical interests. When ethnic identity becomes linked to the allocation of public resources, social policy, and historical narrative, it may shift from cultural identification toward an identity of social interest. The article maintains that contemporary Manchu–Han contradictions are not purely ethnic conflicts, but the product of the combined operation of historical memory, identity recognition, class differences, and material interests. Reducing the binding between ethnic identity and the distribution of public goods, thereby allowing ethnic identity to return more fully to the domain of cultural identification, may be an important direction for alleviating related tensions. |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:2wuge_v1 |
| By: | Yingxiang Li; Tong Liu; Ting Xu |
| Abstract: | We show that investor patience shapes venture-capital (VC) investment strategies and outcomes. Through a randomized experiment with Chinese fund managers, we demonstrate that managers explicitly tailor fund duration and project holding periods to the perceived horizons of their limited partner (LP) base. We find consistent evidence in the field, exploiting a 2014 Chinese reform that opened RMB-denominated VC funds to insurers. We compare treated RMB funds to unaffected USD-denominated funds run by the same general partners (GPs), both investing in Chinese startups. Insurer entry reshaped the LP base by displacing shorter-horizon investors such as individuals. Consequently, treated funds shifted strategy toward longer holding periods and earlier-stage investments, leading to improved portfolio company exits and innovation. Our results highlight the importance of patient ultimate investors in building a successful VC ecosystem, and offer a cautionary note on the ongoing retailization of private markets. |
| JEL: | G22 G23 G24 G32 O3 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35711 |
| By: | Zhenyu Gao; Wei Xiong; Jian Yuan |
| Abstract: | Using mandatory Outlook reports from Chinese mutual funds, we decompose each fund’s equity-market beliefs into macro fundamentals, government policy, and residual sentiment. Policy beliefs, rather than macro beliefs, predict subsequent market returns and help explain the positive alphas observed in China’s mutual fund industry. By contrast, residual sentiment strongly shapes equity allocations and attracts investor flows, even though it does not predict returns. Using maturing wealth management products as an instrument for future aggregate fund flows, we show that funds strategically position their stated beliefs to cater to investors. Overall, our analysis reveals a core tension in active asset management: skilled managers generate performance through policy insights while attracting flows through sentiment alignment. |
| JEL: | G11 G4 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35528 |
| By: | Ali-Yrkkö, Jyrki; Bøegh Nielsen, Peter |
| Abstract: | Abstract The findings demonstrate that regional Nordic trade contains significant hidden exposure to non-European markets. On average, 11% of intermediate imports from Nordic neighbors originate from outside Europe at the second tier. A substantial portion of this non-European exposure is concentrated in China (27.1%) and other BRICS+ countries (16.3%), representing a vulnerability that standard trade statistics, based on only direct trade, fail to capture. The methodology provides a framework for future pan-European value chain analysis. |
| Keywords: | Value chain, Tier, Resilience, Nordic, Imports, Vulnerability, Indirect |
| JEL: | F15 F52 |
| Date: | 2026–09–07 |
| URL: | https://d.repec.org/n?u=RePEc:rif:report:181 |
| By: | Kaiji Chen (Emory University); Hanming Fang (University of Pennsylvania and NBER); Yang Tang (Nanyang Technological University) |
| Abstract: | Rapid economic growth creates large differences in lifetime incomes across generations. This paper examines the intergenerational redistribution generated by subsidized access to appreciating public assets in rapidly growing economies. We show that providing incumbent generations with subsidized access to these assets before future growth is fully capitalized into market values gives them an early claim on subsequent economic growth, thereby redistributing resources from future to incumbent generations. In the context of housing privatization, subsequent capital gains on privatized housing enable homeowners to trade up, further amplifying housing demand, house prices, and intergenerational redistribution. We evaluate the early ownership and capital gains channels of asset-based redistribution in a quantitative equilibrium model calibrated to China’s housing privatization. Relative to more standard pension-based redistribution, we show that asset-based redistribution delivers higher welfare for future cohorts while substantially reducing long-run fiscal burdens once economic growth unexpectedly slows. |
| Keywords: | Asset privatization; Intergenerational redistribution; Housing; Capital gains;Economic transition; Social security |
| JEL: | G28 E02 E5 G11 H2 |
| Date: | 2026–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:26-013 |
| By: | Lawrence Jin; Donald S. Kenkel; Alan D. Mathios; Grace N. Phillips; Revathy Suryanarayana; Hua Wang |
| Abstract: | With the growth of sales of e-cigarettes and other alternative nicotine products, governments face the new challenge of crafting public health messages that provide information to consumers about these less risky but not risk-free products. Bayesian learning serves as the theoretical framework for our analysis of how smokers form their perceptions of the risks of e-cigarettes based on the risks of smoking. This paper consists of two parts. First, we conduct a cross-country descriptive analysis of government messaging and smokers’ perceptions of e-cigarette risks. We study a diverse group of eight countries: Australia, China, Indonesia, Japan, Malaysia, Sweden, the U.K. and the U.S. We find that public health messages range widely across the countries. In online cross-country surveys of adult smokers, on average perceptions of e-cigarette risks are associated with their perceptions of the risk of smoking and with their countries’ messaging. Notably, in all eight countries many smokers incorrectly believe that e-cigarettes are relatively more harmful than smoking and over-estimate the absolute risks of e-cigarettes. In the second part of our study, we report the results of online randomized experiments that compare the effects of different e-cigarette risk messaging about an outbreak of lung injuries (given the acronym EVALI). The U.K. public health message about the low risk of e-cigarettes relative to smoking reduced smokers’ incorrect risk perceptions, while the U.S. public health message increased incorrect risk perceptions. |
| JEL: | I12 I18 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35724 |
| By: | Shi, Yingxin |
| Abstract: | A house is demolished and rebuilt; GDP rises twice, yet the net wealth remains one house- resources flow through the economy without being effectively absorbed. This paper formalizes this intuition: every sector in an industrial network possesses an absorptive capacity κ that measures its ability to transform intermediate inputs into final output. When κ falls below a threshold κ*, the propagation of shocks along upstream and downstream directions becomes systematically asymmetric-upstream cost push can transmit forward through bottlenecks, whereas downstream demand feedback cannot travel backward-preventing capital from completing the full cycle from production to terminal value realization and causing spillover into idling or stagnation. Using 35-sector input-output data for China and the United States from 2000 to 2024, this paper obtains three findings. First, Hansen's endogenous threshold estimation confirms κ* ≈ 0.18, with a highly significant difference in propagation coefficients above and below the threshold (F = 18.92, p |
| Keywords: | input-output network, absorptive capacity threshold, directed propagation, financial excess, China–US comparison |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:343033 |
| By: | Ying Bai; Ruixue Jia |
| Abstract: | Institutions that claim to reward merit often also serve as engines that drive the formation of important social networks. We examine this dual role in China’s Imperial Examination, one of history’s longest-lived meritocratic systems. We draw on exam performance data for 24, 269 individuals across 112 national examinations in the Qing dynasty (1644–1905) and trace who among them rose to become top officials. Strong exam performance increased the likelihood of attaining high office, but advancement also depended on individuals’ ties to powerful examiners. Because performance and ties to powerful examiners were strongly complementary, individuals’ success appeared to rest on merit even as social networks played a role. Following the major political transformations of the 1840s, the importance of examiner ties persisted, although the influential examiners themselves changed. These findings help explain why such systems retain legitimacy even when networks matter greatly. |
| JEL: | D73 D85 N45 Z13 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35556 |
| By: | Harald Fadinger; Lei Li; Sophia Praetorius; Jan Schymik |
| Abstract: | We study how the U.S.–China trade war affected manufacturing activity in third countries using a novel plant-level dataset covering millions of establishments in 50 major economies, including affiliates of more than 200, 000 multinational enterprises (MNEs). Combining establishment-level data with detailed tariff information, we estimate the effects of U.S. and Chinese punitive bilateral output and input tariffs on sales, employment, and establishments across countries, industries, and stages of production. We find that third-country effects of the trade war are highly heterogeneous and largely offsetting, yielding moderately negative net effects overall. Most of the adjustment is driven by multinational enterprises reallocating activity across affiliate networks, while domestic firms respond much less. |
| Keywords: | Global value chains, firm location choice, multinational enterprise, trade policy, tariffs, tariff elasticity, upstreamness, downstreamness, output tariffs, input tariffs, third country effects of trade policy |
| JEL: | F13 F14 F23 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_776 |