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    The New Face of Chinese Industrial Policy: Making Sense of Anti-Dumping Cases in the Petrochemical and Steel Industry
    30 Nov 2010Working Paper Summaries

    The New Face of Chinese Industrial Policy: Making Sense of Anti-Dumping Cases in the Petrochemical and Steel Industry

    by Regina Abrami and Yu Zheng
    The researchers set out to explain differences in China's antidumping actions against importers in the petrochemical and steel industries. During the study period, 66 percent of the country's antidumping cases targeted petrochemical imports, while steel imports were targeted only in 5 percent of the cases. Why did China's petrochemical and steel industries behave so differently in seeking trade protection? The answers put forward by researchers Regina Abrami (Harvard Business School) and Yu Zheng (University of Connecticut) point toward the structural nature of the industries themselves, and against arguments that antidumping actions in China have been driven by retaliation or national industrial strategy alone. Key concepts include:
    • Existing patterns of antidumping investigations in China mainly reflect how firms may respond to economic challenges in the context of structural constraints.
    • Rather than serving as a defense against global competition, strong local interests in China seem to be facilitating it. They do so by getting in the way of the kinds of industrial consolidations that seem necessary to wage successful battles through antidumping mechanisms.
    • The research does not dismiss a role for economic or political interests as motivating factors, but does suggest that in their own right they cannot explain fully the patterns that exist.
    • The research demonstrates that domestic business interest groups can influence state policy outcomes in China; that their ability to do so is closely related to resolution of collective action problems; and that Chinese industrial strategy is a far less coordinated political outcome than the increasingly popular idea of "China Inc." suggests.
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    Author Abstract

    Why have China's petrochemical and steel industries behaved so differently in seeking trade protection through antidumping measures? We argue that the patterning of antidumping actions is best explained in terms of the political economy of economic restructuring in pillar industries and its effect on industry structures. In the petrochemical industry, the shift toward greater horizontal consolidation and vertical integration reduces the collective action problems associated with antidumping petitions among upstream companies. It also weakens downstream companies lobbying in favor of the general protection of highly integrated conglomerates. In the steel industry, by contrast, national industrial policy in the absence of exogenous economic shocks fails to weaken local state interests sufficiently. Fragmented upstream and downstream channels instead persist, with strong odds against upstream suppliers waging a successful defense of material interests.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: October 2010
    • HBS Working Paper Number: 11-042
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