Different types of firms, different types of products, and their dynamics: An anatomy of Chinaʹs imports

Using highly disaggregated HS 8-digit product-category level data collected by the Chinese Customs Office for 2000 and 2008, we perform an in-depth anatomy of Chinaʹs imports of manufactured goods. We estimate both the extensive margins – number of products imported per product group or trade partner – and intensive margins – amount of imports per product group or trade partner – of Chinaʹs imports. Our paper contributes to the literature of firm heterogeneity in international trade in three different ways. First, we distinguish firms into foreign firms and domestic firms, which are further divided into private firms and public firms. Second, we distinguish products into final goods and intermediate goods. Third, we estimate gravity equations from the perspective of dynamics utilizing a dynamic adjustment model. Overall, our analysis yields a number of new stylized facts about Chinaʹs imports. These, in turn, help us to gain a fuller understanding of Chinaʹs trade patterns in light of its recent emergence as a globally significant importer.