Why Will China Establish a Government-Sponsored Response Mechanism in Countervailing Games?

Julien Chaisse, World Trade Institute, Bern
Luan Xinjie, International Trade Institute of China Jiliang University, Hongzhou

Abstract

In recent years China has faced numerous countervailing duty investigations among others by the United States and Canada . Reactions to countervailing measures are usually much more policy-oriented than market-oriented. Whereas the dominant strategies adopted by the individual exporting enterprises are usually not the payoff dominant ones, China is tending towards establishing a government-sponsored countervailing response mechanism (Gscrm). With the Gscrm, the bounded rationality of the export enterprises in the countervailing counter-action can be eliminated and therefore payoff dominant equilibrium in a countervailing-responding cooperation game can be achieved.