China's exports, subsidies to state owned enterprises and the WTO

In its Protocol of Accession to the World Trade Organization China agreed to eliminate subsidies to loss-making state owned enterprises (SOEs) by 2000. Nonetheless, these subsidies continued at least through 2003. OLS and random effects panel regressions using Chinese provincial data suggest that the subsidies and the annual increments in the long term liabilities of SOEs, mainly bank loans, have been associated with the exports of SOEs in the important exporting provinces. Exports of foreign invested enterprises, reflecting provincial exporting conditions, were also significant. (c) 2005 Elsevier Inc. All rights reserved.