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Containing Chinese State-Owned Enterprises? The Role of Deep Trade Agreements

7 April 2021
3:00 pm

Regional Trade Agreements (RTAs) increasingly include provisions that regulate State Owned Enterprises (SOEs). This paper combines new information on the content of “deep” RTAs and data on Chinese firm-level exports for the period 2000-2011 to analyze the spillover effect of SOE rules on the intensive and extensive margins of Chinese SOEs’ trade. Rather than containing state capitalism, RTAs regulating SOEs signed by Chinese trading partners with third countries actually increase exports and entry of Chinese SOEs as they gain a competitive edge in regulated markets. This spillover effect is robust to several extensions and is even stronger for agreements that include rules on subsidies and competition policy. This finding points to the need for commonly agreed multilateral rules to regulate state owned enterprises.



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Michele Ruta, World Bank