Economic Effects of China’s ImportExpansion Strategy

Abstract

Since 2018, China has enacted a string of policy initiatives to increaseimports. To quantify this import expansion strategy’s economic effects, we created a largenumerical general equilibrium model and quantitatively simulated the economic effectsof the reductions of tariff and non-tariff barriers on China and other economies. Oursimulation results show that overall, China’s import expansion strategy benefited both itselfand others and contributed to employment, welfare, and trade growth in China and the restof the world. In relative terms, however, China’s import expansion strategy benefited othercountries more than it did itself and contributed more to the growth of the world economy.Additionally, the import expansion strategy may effectively promote China’s trade balance,and the trade equilibrium effect driven by the reduction of non-tariff barriers is moresignificant than that of tariff barriers. Furthermore, regarding the self-benefiting effects ofimport expansion, the effects of nontariff measures are significantly greater than those oftariff measures, and this result has policy implications for China’s import expansion strategygoing forward.