Does the internationalisation of China's agri-food standards affect export quality upgrading?—Evidence from firm-product-level data

Abstract

China attaches importance to the development of standards in agri-food sectors, especially the harmonisation of national standards with international standards. Our study matches agri-food product standards and firm-product customs data for the period from 2000 to 2015. We perform an empirical analysis using the ‘distance to the frontier’ model to identify the effects of the internationalisation of China's agri-food product standards on the quality upgrading of firms' exported products. The results suggest that when Chinese standards are harmonised with international measures, there is a significant positive impact on quality upgrading. In addition, this international standards–quality relationship is nonmonotonic; that is, firm-level products that are far from the quality frontier are more likely to upgrade quality in response to an increase in standards. Conversely, national standards have not demonstrated good trade performance and have no significant quality-promoting effect on firms' export products. These results are robust to various checks. Moreover, the heterogeneous effects further suggest that the positive correlation between international standards and quality upgrading is even stronger for modified versions of international standards, in smaller-sized firms and foreign-invested firms. Finally, the quality upgrading effects of international standards induce an increase in both the extensive and the intensive margins of firms' exports.