Note: This article was originally published by Wiley Online Library on 22 October 2020.  Dr Lili Yang Ing is acknowledged as the contributing author. 

We investigate how trade liberalization affects the performance of Chinese manufacturing firms via sourcing from the South. Taking imports from Indonesia, the largest country in Southeast Asia —China’s current trading partner as an example, we find that Chinese firms with higher import shares from Indonesia perform better in productivity, exports, and sales, and they are more likely to engage in processing exports. Moreover, the impacts of foreign trade liberalization on China’s export scopes are more pronounced for firms with larger import shares from Indonesia. Such findings are robust to different empirical specifications.

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Trade Liberalization and Chinese Firm’s Exports: Sourcing from Indonesia