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Regional resources and regional resilience to trade shocks: Evidence from the US-China trade war

Date created
2022-10-11
Authors/Contributors
Author: He, Canfei
Author: Li, Jing
Author: Wang, Wenyu
Author: Zhang, Peng
Abstract
This paper studies how firms’ costs of switching to alternative locations affect regional resilience to the 2018 US-China trade shock, and how national and subnational governments in China develop regional resources to mitigate the impact of the adverse shock. Using monthly nightlight data, we apply a difference-in-difference approach and find that cities exporting mostly to the US, especially those relying on processing trade and foreign firms, experienced a large reduction in economic activities shortly after the trade war started. Certain economic resources (top-tier industrial parks) and socio-political resources (sister-city relationships with US cities) developed by governments can increase firms’ switching costs and therefore increase a city’s resilience to the trade shock.
Document
Description
Paper presented at the 6th Global Strategy and Emerging Markets Conference, May 2022. Vancouver, Canada.
Copyright statement
Copyright is held by the author(s).
Scholarly level
Peer reviewed?
Yes
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