The “International Trade Research Trend” section aims to release the latest research findings in the field of international trade published in authoritative Chinese journals such as “Social Sciences in China,” “Economic Research Journal,” “Journal of Management World,” “China Economic Quarterly,” and “The Journal of World Economy.” It strives to provide everyone with timely, accurate, and high-quality front-line dynamics in the field of international trade.

Social Sciences in China

Technological Containment and Counter-Containment in Major Power Competition

Wang Yong, Zhao Changwen, Jiang Shenzhe

Abstract: How should latecomer nations dynamically and effectively respond to technological containment imposed by leading major powers? Existing economic theories lack considerations of international relations, while current international relations theories inadequately explore the market behavior of micro-level actors such as firms. By constructing a general equilibrium economic theory framework that incorporates the dynamic game of international relations, the study finds that when leading major powers choose to impose technological containment on latecomer nations due to their endogenous hegemonic interests, the latter can counter-contain through subsidies to domestic production and R&D. Moreover, the optimal subsidy rate increases as the degree of technological containment intensifies. Although subsidy policies may provoke stricter technological containment in the short term, they reduce the duration of containment and lead to higher welfare levels in the medium to long term. Given the potential "moral hazard" issues that may arise from subsidy policies in practice, latecomer nations must also adopt other feasible strategies, including competition policies. Additionally, by enhancing the efficiency of technological spillovers from defense-related strategic industries to civilian industries, latecomer nations can improve their capacity and effectiveness in counter-containment.

Keywords: Major power competition; technological containment; industrial policy; defense-related strategic industries

The Journal of World Economy

Robotic Applications and Foreign Capital Stabilisation

Qi Jianhong; Zhou Mingzhu

Abstract: As a vital link between domestic and international markets and resources, foreign direct investment plays a pivotal role in fostering the new development paradigm. Based on business data from the China Customs Import Database and the China Industrial Enterprises Database from 2000 to 2015, this paper examines the impact and action mechanism of industrial robots on foreign divestment, and further considers the role they play in the differential explanation of cross-firm and clustered foreign divestments. The results indicate that the adoption of industrial robots can significantly reduce the risk of foreign divestment and prolong the survival of foreign-funded firms. This effect is mainly achieved through the optimisation of the labour market, ensuring  supply chain  stability and enhancing market diversification. The adoption of industrial robots is an essential factor in explaining differences in cross- firm  foreign  divestment,  and  it helps  facilitate  the  formation  of a beneficial  economic phenomenon characterised by  orderly  foreign  divestment. It  can  also mitigate the  detrimental impact  of clustered divestment within the same region and industry, as well as across upstream and downstream industries. These findings offer new perspectives on attaining“stable foreign investment ”in the age of artificial intelligence.

Key words: divestment, industrial robots, foreign capital stabilisation, differential decomposition

JEL codes: D21, F21, O33

The Journal of World Economy

Trading Access Policy and Firm Innovation: Evidence from Bunching Estimation

Kong Dongmin; Liu Chenhao; Ye Wenxu

Abstract: This paper employs a bunching estimation method to assess how the right to participatein international trade influences corporate innovation activities. Drawing on matched samples from theAnnual Survey of Industrial Production, the China General Administration of Customs database and thePatent database, the study finds that firms significantly adjust their registered capital beyond the policythreshold to obtain trading rights and thus be able to participate in international trade, resulting in a14.6% increase in the proportion of firms engaged in international trade. From the extensive marginperspective, there is a 14% increase in the number of firms involved in independent research anddevelopment among those engaged in the policy. From the intensive margin perspective, the number ofpatents for firms participating in the policy increased 2.65 times compared to the control group. Thequality of patents for exporting firms also significantly improved due to the continuous accumulation ofadvanced knowledge from abroad. Learning-by-doing is identified as the primary mechanism throughwhich trade promotes innovation. Finally, the paper concludes that the promotion effect presents aheterogeneous distribution across different types of firms and industries, analysing potentialmismatching issues. By employing a novel estimation method, this work provides an in-depth overviewof the impact of firm participation in international trade, enriching the existing literature and offeringpolicy implications for China’s path towards high-quality development.

Key words: innovation, international trade, bunching estimation method

JEL codes: F14, G38, O34