Recently, Zhang Ziyao, a researcher at the Center for International Cooperation and Disciplinary Innovation of Income Distribution and Public Finance under the Ministry of Education and the Ministry of Human Resources and Social Security, officially published a co-authored paper, "External Demand Shock, Government Procurement Management, and the Development of Small and Micro Enterprises", in Issue 3 (2026) of the top-tier domestic journal Economic Research Journal. He serves as the corresponding author of the study, and his collaborators include Zhao Renjie and Huo Yuchen from the School of Economics & Management at Northwest University.
Highlights:
The Recommendations of the Central Committee of the Communist Party of China for Formulating the 15th Five-Year Plan for National Economic and Social Development, reviewed and adopted at the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China, emphasizes the need to "uphold the strategic foundation of expanding domestic demand". In the face of severe challenges to the international economic and trade order, strengthening domestic demand management is not only central to local governments' macroeconomic regulation and the promotion of enterprise development, but is also an inherent requirement for China to build a comprehensive domestic demand system. This study is based on the 2018 US policy of imposing large-scale tariffs on Chinese products exported to the United States. Utilizing micro-level enterprise data and government procurement award announcement data, the research examines how local governments use targeted procurement management to mitigate the adverse effects of tariff shocks on local small and micro enterprises. The study finds that, under the impact of tariffs, export enterprises shifting to domestic sales significantly intensifies the survival pressure on non-export small and micro enterprises. The less capable export enterprises are of shifting to other export markets, the more likely they are to turn to domestic sales, which in turn amplifies the negative effect of tariff increases on non-export small and micro enterprises. Local governments help local non-export small and micro enterprises cope with market crowding from shifts in exports to domestic sales by increasing their procurement of goods from these firms. Local government procurement management actions mainly occur in regions with less fiscal pressure and are more prominent in the high-tech industry. The government's targeted procurement support for non-export small and micro enterprises gradually diminishes after the trade war ends. Finally, procurement management by local governments under tariff shocks can effectively enhance the profitability of non-export small and micro enterprises.
About the Author:
Zhang Ziyao is an associate professor at the School of Public Finance and Taxation, Zhongnan University of Economics and Law, a researcher at the Center for International Cooperation and Disciplinary Innovation of Income Distribution and Public Finance under the Ministry of Education and the Ministry of Human Resources and Social Security, and a Young Scholar of the Wenlan Scholar Program. He has been selected for the High-Level Talent Program of Hubei Province and holds a Ph.D. in Economics from Renmin University of China. His research areas include fiscal and tax policy, income distribution, and industrial economics. His research findings have been published in major academic journals such as Economic Research Journal, Journal of Management World, China Economic Quarterly, and The Journal of World Economy. He has presided over the young scientists fund projects of the National Natural Science Foundation of China and general programs of the China Postdoctoral Science Foundation, and participated in several major projects of the National Social Science Fund of China and general programs of the National Natural Science Foundation of China. Furthermore, he has received multiple honors, including the Hubei Provincial Social Science Outstanding Achievement Award, the Mundell-Huang Prize on Economics, the Contemporary Economics Doctoral Innovation Project, and the Tan Chongtai Development Economics Scholarship.