We hypothesize that $β1$ will be positive, and $β2$ will not be significantly different from 0: products characterized by a larger NTR gap exhibit an increase in exports to the United States post-WTO, but there should be no significant increase in exports to other destinations. The results are reported in panel A of table 5; in columns 3 and 4, quadratic controls for tariffs are also included. Columns 1 and 3 include standard errors clustered at the partner level, and columns 2 and 4 include standard errors clustered at the product level. We observe that $β1$ is positive and $β2$ is insignificant, consistent with the hypothesis that the key immediate shock experienced with WTO accession was a reduction in trade uncertainty in the U.S. market, not a shock in other major export destinations.18

Table 5.

Placebo Tests

(1)(2)(3)(4)(5)(6)
A: Chinese Exports to All Destinations
Post $×$ NTR gap $×$ U.S. .338 .338 .337 .337
(.029)*** (.007)*** (.029)*** (.007)***
Post $×$ NTR gap $×$ Other four −.113 −.113 −.118 −.118
(.478) (.081) (.478) (.082)
Observations 330,669 330,669 330,669 330,669
B: Placebo NTR Gap
Exports Primary Secondary Tertiary GDP Per Capita
Other partner gap −.535 .106 .085 .017 .038 .015
(.573) (.060)* (.056) (.049) (.027) (.028)
Observations 5,158 14,722 15,688 15,375 29,782 26,347
(1)(2)(3)(4)(5)(6)
A: Chinese Exports to All Destinations
Post $×$ NTR gap $×$ U.S. .338 .338 .337 .337
(.029)*** (.007)*** (.029)*** (.007)***
Post $×$ NTR gap $×$ Other four −.113 −.113 −.118 −.118
(.478) (.081) (.478) (.082)
Observations 330,669 330,669 330,669 330,669
B: Placebo NTR Gap
Exports Primary Secondary Tertiary GDP Per Capita
Other partner gap −.535 .106 .085 .017 .038 .015
(.573) (.060)* (.056) (.049) (.027) (.028)
Observations 5,158 14,722 15,688 15,375 29,782 26,347

In panel A, the independent variables are the NTR gap interacted with post interacted with a U.S. dummy, and the post-NTR interaction interacted with a dummy for the other four top export destinations. The dependent variable is China's exports to all destinations at the two-digit product level from 1995 to 2013, as reported by UNCOMTRADE. The specification also includes controls for the product-specific tariff and product-year fixed effects; in columns 3 and 4, quadratic tariff controls are added. Standard errors are clustered by partner in columns 1 and 3, and by product in columns 2 and 4. In panel B, the independent variable is the interaction of a post–2001 dummy and the standardized gap between the highest “other trading partner” tariff observed for a given industry and the tariff imposed on Chinese exports. The specifications are otherwise identical to those described in table 1. We also control flexibly for the high “other trading partner” tariff by constructing fifty dummy variables corresponding to different percentiles of the tariff distribution, generating dummy variable fixed effects, and interacting those fixed effects with the post dummy. Significant at ***1%, **5%, and *10%.

Close Modal