Tit-for-tat in antidumping: How did China fight its antidumping wars with its trading partners?

Abstract

Existing studies have examined the determinants of antidumping measures in different countries. Much less attention has been paid to the role of high-frequency bilateral relations in imposing temporary trade barriers. Using quarterly data on antidumping cases from 1997Q1 to 2020Q4, this paper examines the bilateral relationship between China and its major trading partners in imposing antidumping. A bivariate vector autoregressive methodology is employed and Granger causality tests are carried out. We find that antidumping investigations against China by the US significantly lead to and predict the investigations against the US by China, suggesting that the US is the first mover and China is the follower that retaliates. In contrast, in bilateral relations between China and the European Union, Korea, or Japan, there is no evidence of significant causality in either direction. Furthermore, we find that China retaliates against the US both within and across industries. While China’s retaliatory measures have shown some effectiveness in terminating outstanding US investigations, this is not always the case. However, this tit-for-tat behavior does effectively deter future investigations by the US.