“Explaining Trade Barriers within China: Protectionism, Infrastructure, or Input Costs?” by Zhigang LI
The University of Hong Kong
This paper provides new evidence on the determinants of trade barriers within China. In particular, highly disaggregated monthly price data during 1992-2005 are used to infer the components of internal trade barriers between 36 major cities of China. The relationship between the components (transport costs and local markups) and potential determinants are then examined. It is found that (1) coal prices are significantly correlated with trade barriers within China. (2) Transport infrastructure investments might have helped reduce trade barriers by reducing congestion. (3) No evidence suggests that local protectionism has been an important component of trade barriers within China.