Heterogeneous Impact of Non-Tariff Measures through the Global Value Chains: Empirical Evidence from China

This paper investigates the impact of non-tariff measure (NTM)’s stringency on Chinese firms’ positioning in the GVC, which is measured by two types of GVC positioning indices. We then estimate the impact of NTMs on various firm performance by paying special attention to how the impacts vary across firms with different positioning in the GVC. The results show that NTMs imposed against and imposed by China could significantly reduce firms’ linkages with foreign countries, thereby reducing the firms’ importance within the GVC. We also find that stricter NTMs could even hinder firms’ innovative activities and decrease exports and imports. Further analysis indicates that these negative impacts of NTMs on firms are heterogeneous across firms depending on their original position in the GVC.