Economic Effects of China’s Import Expansion Strategy

Li Chunding (李春顶)*1, Lang Yongfeng (郎永峰)2 and He Chuantian (何传添)3

1School of Economic Management, China Agricultural University, Beijing, China

2School of Economics, Nanjing Audit University, Nanjing, China

3Research Center for International Trade and Economics, Guangdong University of Foreign Studies, Guangzhou, China

Abstract: Since 2018, China has enacted a string of policy initiatives to increase imports. To quantify this import expansion strategy’s economic effects, we created a large numerical general equilibrium model and quantitatively simulated the economic effects of the reductions of tariff and non-tariff barriers on China and other economies. Our simulation results show that overall, China’s import expansion strategy benefited both itself and others and contributed to employment, welfare, and trade growth in China and the rest of the world. In relative terms, however, China’s import expansion strategy benefited other countries more than it did itself and contributed more to the growth of the world economy. Additionally, the import expansion strategy may effectively promote China’s trade balance, and the trade equilibrium effect driven by the reduction of non-tariff barriers is more significant than that of tariff barriers. Furthermore, regarding the self-benefiting effects of import expansion, the effects of nontariff measures are significantly greater than those of tariff measures, and this result has policy implications for China’s import expansion strategy going forward.

Keywords: Import expansion strategy, economic effects, general equilibrium simulation

JEL Classification Code: F51, C68, F13

DOI: 10.19602/j.chinaeconomist.2022.05.04