Beyond Dollar Exchange-Rate Targeting : China's Crisis-Era Export Management Regime

While considerable attention has been directed towards Chinese management of its currency vis-à-vis the U.S. dollar, the frequent alteration during the recent global economic downturn of rebates on value-added taxes paid by exporters on the inputs they have imported has been overlooked. In this paper the relevant Chinese policy changes are documented and evidence to help gauge the relative importance of this form of intervention presented. Given the relatively high share of imported value-added in Chinese exports, even apparently small changes in VAT export rebates are equivalent to non-trivial percentages of domestic value-added. This finding adds further nuance to our understanding of the impact of supply chains on the resort to protectionism during the crisis.