Effects of heterogeneous SPS measures on agricultural growth: Evidence from China

Abstract

In order to explore the sustainable growth of Chinese agriculture, this paper assesses how the heterogeneous SPS measures affect China’s growth margins and quality upgrading in the agricultural sector. We estimate improved gravity-model that exploit the cross-country differences in SPS measures over the period from 2000 to 2014. Our findings show that the heterogeneous SPS measures restrict the intensive margin and extensive margin, but significantly promote the product quality-even with no significant effect on price index. Conditional on quality upgrading, the heterogeneous SPS measures decrease the extent of quality upgrading. On one hand, because of cross-country differences in SPS standards, standards from developed countries have less effective trade effect on China’s agri-products export quality upgrading; On the other hand, because of cross-firm differences in the ability to deal with SPS standards, the laggards in China have the higher probability to switch to lower entrance barrier countries. Therefore, it is possible for China to trap in the low-quality agricultural growth in the long term.