Government credit and trade war

Arbeitspapier

By merging transaction-level trade data from China Customs and loan data from the China Development Bank (CDB), we analyze the effects of government credit on trade activities. We find that CDB credit mainly flows to SOEs in strategic industries at the top of the supply chain. These up-stream loans lead to the lower price and higher amount of export goods of private firms in down-stream industries, which leads to decreases in employment and performance of the US firms in the same industry. In contrast, the US firms in downstream industries use cheaper intermediate goods imported from China and perform better subsequently.

Object Details

• ISBN: 978-952-323-270-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BOFIT Discussion Papers ; No. 7/2019

Classification and Topics

• Classification: Wirtschaft ; Money Supply; Credit; Money Multipliers ; International Finance: General ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Subject: government credit ; export ; supply chain ; trade war

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cai, Ning ; Feng, Jinlu ; Liu, Yong ; Ru, Hong ; Yang, Endong
• Event: Veröffentlichung
• (who): Bank of Finland, Institute for Economies in Transition (BOFIT)
• (where): Helsinki
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/212915
• Last update: 10.03.2025, 11:45 AM CET