Trade liberalization, input intermediaries and firm productivity:
Evidence from China
Fabrice Defever a, Michele Imbrunob, Richard Kneller c,⁎

Fabrice Defever a, Michele Imbrunob, Richard Kneller c,⁎
a City, University of London and CEP, London, UK
b Sapienza University of Rome and GEP, Roma, Italy
c GEP, University of Nottingham, CESIfo, Nottingham, UK
We investigate theoretically and empirically the role of wholesalers in mediating the productivity
effects of trade liberalization. Intermediaries provide indirect access to foreign produced
inputs. The productivity effects of input tariff cuts on firms that do not directly import therefore
depends on the extent that wholesalers are a feature of input supply within an industry.
Using firm level data from China, we document that wholesalers play no such role for direct
importers. However, other firms experience productivity gains from reducing input tariffs if
trade intermediation of foreign inputs within their sector is high. They suffer efficiency losses
otherwise.