Beijing Normal University
NBER Working Papers and Publications
|June 2017||How Did China’s WTO Entry Benefit U.S. Consumers?|
with Mary Amiti, Robert C. Feenstra, John Romalis: w23487
China’s rapid rise in the global economy following its 2001 WTO entry has raised questions about its economic impact on the rest of the world. In this paper, we focus on the U.S. market and potential consumer benefits. We find that the China trade shock reduced the U.S. manufacturing price index by 7.6 percent between 2000 and 2006. In principle, this consumer welfare gain could be driven by two distinct policy changes that occurred with WTO entry. The first, which has received much attention in the literature, is the U.S. granting permanent normal trade relations (PNTR) to China. A second, new channel we identify is China reducing its own input tariffs. Our results show that China’s lower input tariffs increased its imported inputs, boosting Chinese firms’ productivity and their export va...