The complementary effects of 'Made in China 2025' industrial policy and trade liberalisation on China's export of relevant products

This research explores the synergy between China's 'Made in China 2025' (MIC25) policy and trade liberalization through FTAs, particularly their effect on export margins. Analyzing China's MIC25 product exports from 2011-2019 using DID models, it was found that post-MIC25 implementation, relevant exports saw marked growth in both intensive and quantity margins. Regression analysis revealed the China-Korea FTA significantly improved the quality or price margins of China's MIC25 exports to Korea. The increase in price margins was notably higher in FTA-partner countries. These findings indicate that FTAs enhance industrial policies by bettering market access and reducing costs for high-quality MIC25 products. This study adds to the discourse on trade liberalization and industrial policy's role in export performance, offering valuable insights for policymakers and businesses to understand trade policy impacts and craft industrial strategies complemented by trade liberalization.