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(Correspondent: Zhong Yiming) Recently, the paper “Trade policy uncertainty and capacity utilisation rate: Firm-level evidence from China’s WTO accession” co-authored by Professor Mao Qilin, Associate Professor Xu Jiayun and Ph. D. candidate Zhong Yiming of our school has been published in internationally renowned SSCI journal, The World Economy, in the 9th issue of 2024.

This paper was one of the first to explore the impact of trade policy uncertainty (TPU) reduction on Chinese firm capacity utilisation rate from the perspective of trade policy variation. Based on a quasi‐natural experiment of the implementation of Permanent Normal Trade Relation (PNTR) after China's WTO accession, this paper adopts the difference‐in‐difference (DID) method to conduct empirical analysis, and finds that reduction in TPU significantly raises firm capacity utilisation rate. The mechanism tests show that export expansion is an important channel through which reduction in TPU raises firm capacity utilisation rate, especially for firms exporting to the United States; reduction in TPU also raises firm capacity utilisation rate through the improvement of production efficiency; in addition, reduction in TPU raises firm capacity utilisation rate along the downstream linkages, whereas the effect of the upstream linkages is insignificant. Finally, this paper takes a step further to conduct empirical analysis at industry level, the results show that reduction in TPU also significantly raises manufacturing aggregate capacity utilisation rate, and the improvement of resource reallocation efficiency (especially the exit of the firms with backward production capacity) plays an important role. Our study was helpful to understand the driving forces of the changes in Chinese manufacturing capacity utilisation rate in recent years, and it also provides new ideas for solving over‐capacity.

The World Economy is a top-tier SSCI journal in the field of international economics, with an impact factor of 2.6 in 2023. It is dedicated to publishing research related to trade policies at the national, regional, and global levels, while also covering broader international topics related to trade, such as exchange rates, the International Monetary Fund/World Bank, debt, the environment, and more.