Different types of firms, different types of products, and their dynamics: An anatomy of China's 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 China's 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 China's 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 China's imports. These, in turn, help us to gain a fuller understanding of China's trade patterns in light of its recent emergence as a globally significant importer.

► We estimate both the extensive margins and intensive margins of China's imports. ► We distinguish firms into foreign and domestic firms. ► We also distinguish products into final and intermediate goods. ► We estimate gravity equations from the perspective of dynamics. ► Overall, our analysis yields a number of new stylized facts about China's imports.