“Quality Sorting of Chinese Exporters” by Susan Zhu
Michigan State University
Using a comprehensive dataset that links trade transactions to a panel data of Chinese firms over the period 2000-2006, we relate export prices directly to exporter attributes. We make the following new findings. First, in the same foreign market, larger, more productive, more capital intensive, and more skill intensive firms charge a higher export price of the same 8-digit HS product. Second, as firms grow larger, become more productive, and pay higher wages to attract better workers, they tend to raise the price of the goods that are already exported. Third, within the same foreign market, firms that use imported intermediate inputs and capital goods tend to charge a higher export price of the same HS product. Fourth, within the same foreign market, firms that do R&D and produce a bigger share of new goods tend to have a higher export price of the same HS product. All of these results provide strong and direct evidence for quality sorting of Chinese exporters.