Credit constraints, firm ownership and the structure of exports in China

We investigate how the export performance in China is influenced by credit constraints. Using panel data from Chinese customs, we show that credit constraints affect the sectoral composition of exports. We confirm that credit constraints provide an advantage to foreign-owned firms and joint ventures over private domestic firms in sectors with higher levels of financial vulnerability. We show that these distortions have been lessened over the period in conjunction with the reduction of State control over the financial intermediation system.