How Do Technical Barriers to Trade Affect China's Imports?

This research adopts the heterogeneous-firm approach to analyze how technical barriers to trade (TBT) imposed by China affect its imports. The empirical analysis is based on a sample covering China's import control measures (e.g. TBT, tariff, license and quota) of all harmonized system (HS) 4-digit products during the period 1998-2006. A modified two-stage gravity model is used to correct for Heckman selection bias and firm heterogeneity bias. This paper finds that, in general, TBT reduce China's import probability with potential trade partners, but raise the import values with existing trade partners. Further evidence shows that the TBT effects on trade value remain quite stable. However, the TBT effects on trade probability vary a great deal across industries and countries in different time periods.