The impact of Chinese technical barriers to trade on its manufacturing imports when exporters are heterogeneous

In the past few decades, China has put substantial efforts into liberalising its trade and economy that accelerated after its accession to the World Trade Organisation (WTO) in December 2001. In this period, China has significantly reduced its tariffs on manufacturing imports. However, the proliferation of non-tariff measures imposed by China has made it the country notifying the second largest number of technical barriers to trade (TBTs) to the WTO after the USA. Nevertheless, there has been no case in the dispute settlement mechanism of the WTO against China violating the TBT agreement. This paper investigates the heterogeneous impact of Chinese TBTs on the imports of manufacturing products at the 6-digit level of the Harmonised System during 2002–2015. Heterogeneity of exporting firms, sample selection bias, multilateral resistances, and endogeneity bias are controlled for according to the recent strands of gravity modelling. Using the disaggregated data and controlling for these problematic issues in the estimations, paper finds no significantly overall impact of Chinese TBT on imports in comparison with earlier studies in the literature. However, the impact differentiated across exporting countries hints at prohibitive effects against few exporters. The impact on traded prices and quantities provide more insights on how these TBTs affect different exporters. The imposed standards and regulations embedded in these trade policy measures allowed the Chinese economy to gain better access to larger exporters from the more developed economies who could easily comply with TBTs without increasing prices but substituting those exporters who did not comply with TBTs, leading to an overall insignificant net impact on imports values to China.