Revisiting the Effective Rate of Protection in the Late Stages of Chinese Industrialisation

Abstract

Abstract In this paper, we generalise conventional measures of the effective rate of protection by: (i) relaxing their small‐country assumptions; (ii) taking into account multiple stages of production; and (iii) abstracting away from their assumptions on the time‐invariance of the underlying technology using annual IO tables. We apply our new measure to China's structure of tariff protection from 1992 to 2010. When compared to conventional measures, we find its effective rates of protection to be smaller in magnitude and even negative in some sectors. The new measures are also related to industry characteristics in sensible ways, calling into question the applicability of conventional measures in the context of present‐day China.

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