Heterogeneous Impacts of COVID-19 on Trade: Evidence from China’s Province-level Data

Discussion Papers

No.803

by Dapeng Cai and Kazunobu Hayakawa

December 2020

ABSTRACT

This study investigates how the extent of COVID-19 damage affected China’s province-level trade with foreign countries and reports the heterogeneous effects of these damages. Using monthly trade data for January–August 2019 and 2020 and the number of confirmed COVID-19 cases, in a gravity equation, we measure the damage extent on exports and imports separately. The results show that a provincial rise in the confirmed cases decreases exports and imports, especially until March. The larger negative effects of COVID-19 are more prominent on the processing than ordinary trade; these effects are smaller in provinces with a larger number of deaths during the severe acute respiratory syndrome outbreak. However, urbanization and mobile phone diffusion exhibit a potential to mitigate these effects on trade.

Keywords: COVID-19, International Trade, China

JEL classification: F15, F61, I18

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