Can the Reform of “Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services” Help Drive Export Diversification of Wood-Processing Enterprises?

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

1.Introduction
This section, while providing an adequate general framework for the issues addressed, could benefit from a more precise delineation of the gaps in the literature and an explanation of the working hypotheses. The introduction should establish a clearer relationship between the relevant economic theory and the need to investigate the impact of the "Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services" reform on export diversification. It is important that the formulation of the objectives be more analytical and the links between them and the methodology adopted be better substantiated. It would also be appropriate to include a discussion of the importance of the macroeconomic context, emphasizing the particularities of the Chinese economy and their relevance to export issues.

2. Literature Review
The literature review provides a valuable synthesis of previous research, but it could be organized in a more systematic manner by dividing it into distinct subsections highlighting, for example, the impact of institutional factors on foreign trade, the influence of regulations on international competitiveness, and relevant studies on the effects of trade facilitation policies on export diversification. In addition, the comparative analysis of existing results should be more explicit, so as to more clearly identify unexplored directions in previous research. A deeper integration of recent studies would also be beneficial, as some of the references used are relatively old and the global economic context has changed significantly in recent years.

3. Theoretical Analysis and Research Methodology
The exposition of the theoretical model is well founded. The conceptual framework explaining the mechanisms by which RSDOs influence export diversification should be more clearly detailed, emphasizing the causal links between variables and providing specific examples to support the hypotheses formulated.

4. Data Sources and Descriptive Statistical Analysis
This section is well structured but could be improved by a more detailed explanation of the data sources used. For example, instead of stating generically that the data come from the "China Industrial Enterprises Database (2014)", a brief discussion of their representativeness, the sample selection criteria and potential limitations associated with the use of this dataset would be useful. In addition, the descriptive analysis could be enriched by including graphical visualizations (such as histograms, scatter plots or box-plots) to illustrate the distribution of the key variables and allow a better understanding of the relationships between them.

5. Analysis of Empirical Results
The empirical analysis is detailed and methodologically sound, but the interpretation of the results could be extended to provide a deeper economic perspective. Instead of just presenting the coefficients of the econometric estimates, it would be useful to discuss their implications in practical terms. For example, what does it mean, in economic terms, that the DSAB reform has a significant effect on the diversification of exported products but not on the diversification of export markets? The possible mechanisms driving this result should be clearly explained and reference should be made to similar studies to validate or contradict these conclusions. Also, integrating a comparative discussion with the results of other studies could increase the robustness of the argument.

6. Conclusion
The conclusions of the study are well formulated, but should be more closely related to the original objectives and hypotheses. In addition, the practical implications of the research should be more clearly developed by formulating specific policy recommendations. At present, the section contains general suggestions, but a more detailed analysis of how institutional factors can be optimized to enhance export diversification would be of great value. It would also be useful to add a discussion of the study's limitations and future research directions, suggesting possible extensions to the analysis, such as using more recent data or applying the methodology to other industries.

Comments for author File: Comments.pdf

Author Response

Dear editor and reviewers,

We are truly grateful to yours and reviewers’ critical comments and thoughtful suggestions for our manuscript entitled “Can the reform of "Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services" help drive export diversification of wood-processing enterprises?” (ID: forests-3542643). Based on these comments and suggestions, we have made careful modifications on our manuscript. The changes based on reviewers was marked in red color. We hope the revised manuscript will meet your magazine’s standard. On behalf of all the authors of this article, I would like to express my gratitude to the three reviewers for their suggestions not only to make our article better, but also to increase the breadth and depth of our research. I will answer each reviewer's questions and comments one by one.

 

Sincerely yours,

Weiming Lin

Fujian Agriculture and Forestry University

 

 

Reviewer: 1

Comments and Suggestions for Author

 

1. This section, while providing an adequate general framework for the issues addressed, could benefit from a more precise delineation of the gaps in the literature and an explanation of the working hypotheses. The introduction should establish a clearer relationship between the relevant economic theory and the need to investigate the impact of the "Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services" reform on export diversification. It is important that the formulation of the objectives be more analytical and the links between them and the methodology adopted be better substantiated. It would also be appropriate to include a discussion of the importance of the macroeconomic context, emphasizing the particularities of the Chinese economy and their relevance to export issues.

Reply: Thank you for pointing out the specificity of China's economy. Based on your feedback, I have incorporated a discussion on the significance of the macroeconomic background in the preface, highlighting the unique characteristics of the Chinese economy and its relevance to export-related issues. Additionally, the connections between relevant economic theories and various research factors have been clarified. However, the relationship between methodological argumentation and research was not addressed in the preface, as more detailed methods will be elaborated in the research section. The specific modifications are as follows:

L32-42 （Due to differences in software versions, the lines where the modified parts are located may vary slightly. We would like to ask experts and editors for their understanding.）: On April 2, 2025, the United States has announced the imposition of a 10-percent "minimum baseline tariff" on all imports and an "individualized reciprocal higher tariff" on the countries and regions with which the United States "has the largest trade deficits. Subsequently, the Trump administration has imposed a minimum tariff rate of 145% on Chinese goods imported to the United States. This event once again highlights potential disruption in export-oriented economies due to an overly concentrated export market. Ex-port market diversification is a crucial strategy to deal with tariff barriers and even other trade protectionism [1]. And export product diversification can help a country or enterprise to mitigate international market risks counter external demand shocks, and achieve stable export growth [2]. However, the uniqueness of the Chinese economy provides a crucial background for research.

L45-52: In a government-led economy, local governments exert significant influence over resource allocation, with export diversification emerging as a core objective of structural reform. Thus, China needs to enhance its export diversification further, similar to the challenges many countries face worldwide. Currently, research on the factors influencing export di-versification remains limited, particularly regarding the impact mechanisms across different development stages, enterprise sizes, and industry characteristics, which have yet to be fully explored.

L57-61: Traditional international trade theories construct models and analyze theories based on the assumption that "institutions are fixed and there are no transaction costs" [3]. This led scholars to overlook the impacts of institutional factors on regional or enterprise export trade. However, the "trade driven by institutions" theory has attracted academic attention [4].

L66-71: By streamlining approval processes and optimizing supervision, RSDO directly reduces institutional transaction costs for enterprises. This aligns with Williamson's (1985) trans-action cost theory and offers a valuable experimental opportunity for research. Therefore, analyzing the impact of RSDO on export diversification from the perspective of institutional change can provide micro-level evidence for the theory of "institutionally driven trade.

L89-123: However, most existing studies rely on national or provincial data, thereby overlooking the heterogeneity of institutional reforms among Chinese municipal administrative units and their influence on export diversification for small and micro enterprises. In addition, some research based on micro-enterprise data from China [2,10,11] mainly evaluates the export diversification promotion effect of a single policy (such as the foreign trade registration system) based on data from Chinese enterprises before 2007, which lacks timeliness. Therefore, it is imperative to systematically analyze the mechanisms through which RSDO affects export diversification, considering differences in municipal-level reforms and micro-enterprise data.

The wood-processing industry in China has long been subject to complex and often burdensome administrative procedures, including regulations on logging, wood processing, and export licensing. These regulatory challenges have contributed to high trans-action costs and limited the flexibility of enterprises to respond to changing international market demands. Given these challenges, the RSDO reforms, which aim to simplify ad-ministrative processes, reduce regulatory burdens, and promote market liberalization, are of particular relevance to this sector. By focusing on wood-processing enterprises (WPEs), this study seeks to examine how these reforms can alleviate the regulatory obstacles faced by the industry and foster greater export diversification. Furthermore, as a major sector in China’s manufacturing industry, WPEs provide a clear example of how institutional re-forms can enhance operational efficiency, stimulate product innovation, and open up new market opportunities in the global economy. The Chinese wood-processing industry faces the reality of over-concentrated export markets and an export product structure that still needs optimization. The average number of export products among the 2,141 wood-processing enterprises is 6.32. Additionally, most enterprises' export product diversification index ( from 0 to ∞) is below 0.2. It is significantly influenced by institutional factors such as environmental regulations, safety production supervision, logging permits, wood processing and operation permits, and certification of available timber resources [12,13]. Moreover, the central government actively promotes the RSDO in the forestry sector, such as approving twenty-seven administrative powers, including the filing and approving pilot enterprises for processing imported logs and exporting sawn timber. To this end, this paper takes wood-processing enterprises as the research subject, using data from "National Private Enterprise Survey Database (2014)" to quantify and measure the prefecture-level cities’ RSDO. It then evaluates the effects of the reform on the enterprise export market and product diversification, enriching the micro-level evidence of how institutional factors influence export diversification.  

L124-127: The potential academic contributions of this paper include three aspects: First, this study evaluates the impact of RSDO reform in prefecture-level cities on enterprise export products and market diversification using zero-truncated negative binomial regression and Tobit models.

L132-134: Second, unlike existing literature, this article conducts heterogeneity tests on enterprises across different industry types, sizes, ownership structures, and asset operation capabilities.

L141-143: Third, this study employs the Bootstrap method to test whether the RSDO reform influences enterprise export behavior through cost reduction and technological innovation promotion.

 

2. The literature review provides a valuable synthesis of previous research, but it could be organized in a more systematic manner by dividing it into distinct subsections highlighting, for example, the impact of institutional factors on foreign trade, the influence of regulations on international competitiveness, and relevant studies on the effects of trade facilitation policies on export diversification. In addition, the comparative analysis of existing results should be more explicit, so as to more clearly identify unexplored directions in previous research. A deeper integration of recent studies would also be beneficial, as some of the references used are relatively old and the global economic context has changed significantly in recent years.

Reply: Thank you for your feedback. In response to your suggestion, we have conducted a comprehensive review of the references and supplemented the latest research results published in recent years. The literature review section has been systematically reorganized into three subsections to more clearly present research progress on different topics. Comparative analyses of each study have been added to the revised literature review content, including detailed comparisons of different research methods, data sources, and research conclusions.

L154-245: 2.1 The impact of institutional factors on international trade

Kamuganga [14] found that export costs, export time, operating costs, export procedures, weak export support institutions, and institutional quality significantly negatively impacted the product diversification index, number of export products, export market di-versification index, and the number of export markets. An important marginal contribution of this literature is the increased consideration of export markets. Dennis and Shep-herd [15] and Persson [8] argued that reductions in export costs (transportation costs of a 20-foot container) and export time (the average number of days required to complete customs clearance for export products) could effectively promote an increase in the number of export products in developing countries. Gul et al. [16] reached the same conclusion. From an industrial perspective, Liu and Li [17] announced that increasing an industry's con-tract intensity and enforcement rate improved the diversification of export products in China. Bian and Qiang [10] shifted the focus to the micro-enterprise level, using the change in foreign trade operation from the "approval system" to the "registration system" on 1 July 2004 as an experimental opportunity, and found that the "registration system" significantly increased the export product variety of export enterprises by boosting domes-tic export market supply, providing empirical evidence at the micro level in the Chinese context. Zhang et al. [11] found that being located in export processing zones did not help enterprises explore new export markets, but significantly increased the variety of new ex-port products. However, both studies are based on empirical research of very specific and singular policies, which offer limited decision-making reference value for current pol-icy designers. Hu and He [2] argued that regions with lower marketization levels and higher government intervention suppressed export enterprises’ expansion into new export markets.

2.2 The impact of regulations on international competitiveness

Most current studies rely on cross-country and cross-year data, covering developing countries, transitional economies, and developed nations, with conclusions that offer useful reference points. Cabral and Veiga [18] found that improvements in government accountability, rule of law, political stability, administrative efficiency, and corruption control could significantly enhance a country's export diversification level. Elhiraika and Mbate's [19] research further confirmed the positive effect of administrative efficiency. Balavac and Pugh verified the promoting effect of lower domestic market entry costs on enhancing a country's export product diversification level and increasing export products. Giri et al. [20] found that the higher the governance quality (corruption control, rule of law, and government institutional quality), the higher the level of export product diversification in a country. Azam [21] argued that optimizing industrial policies in Pakistan, including increased export subsidies and tax rebates, significantly promoted export product diversification. Rémy and Ayivodji [7] asserted that increasing trade openness (i.e., simplifying import and export approval procedures) could help to enhance a country's export product diversification level. Yin et al. [22] showed that business environment improvement pro-motes the export variety of a country. Xiong and Wu [23] found that countries with better contract systems had more export product types in contract-intensive industries. The above literature only focused on the impacts of institutional factors on export diversification at the product level. Since the Chinese government emphasizes market diversification or decentralization, the decision-making reference value of the above literature is limited.

2.3 The impact of trade facilitation policies on export diversification

Relevant institutional arrangements for trade facilitation directly impact enterprise exports' fixed and variable costs. This impact on export diversification is a key area of concern in academic research. Some scholars have constructed trade facilitation measurement variables and tested their impact on a country's export diversification. Wilson et al. [24] declared that trade facilitation promoted increased export products by reducing fixed and variable costs. For 2007-17 and 92 countries, Kurul [25] suggested a significant positive relationship between border efficiency and variety in products and markets, and the availability and quality of infrastructure enhance variety in markets. The trade facilitation data in the “World Bank Doing Business data” is the most commonly used. Beverelli et al. [26] used the trade facilitation index compiled by the OECD and found that trade facilitation promoted the growth of a country’s export product and market numbers. Using the same trade facilitation data, Fontagné et al. [9] shifted the research perspective from the national and industry levels to the enterprise level. They found that optimizing trade facilitation measures significantly increased the number of export products for small-scale European export enterprises. Surprisingly, there is still a lack of substantial literature studying the relationship between institutional factors and export diversification in the Chinese context. Measuring trade facilitation at the provincial level fails to capture institutional differences between prefecture-level cities and counties, such as varying administrative approval efficiency and customs clearance procedures within and outside the Free Trade Zone in Fujian Province. This makes it difficult to accurately assess the trade effects of the RSDO or other reforms. Lv and Huang [27] claimed that trade facilitation significantly increased the number of exported products in China. Ouyang and Park [28] suggested that implementing digital trade facilitation significantly improved the extensive margin of exports. Given the imbalanced market-oriented reforms in China, which result in varying institutional environments across regions, Duan and Liu [29] calculated a trade facilitation index for 31 provinces (autonomous regions and municipalities). They found that trade facilitation significantly increased the number of export markets and products for enterprises. Launched in 2013, the RSDO reform in China focuses on streamlining ad-ministrative procedures, delegating powers, and optimizing services to reduce institution-al costs for enterprises. By July 2014, the State Council had abolished or delegated 468 ad-ministrative approval items, and provincial governments had canceled, delegated, or simplified a total of 4,350 approval items [5,23]. The reform aimed to alleviate regulatory bur-dens, thereby enabling enterprises to diversify their export markets and products. However, regional differences in the implementation of the RSDO have led to varying impacts on export diversification across different prefecture-level cities [10,29]. Brazil has implement-ed various programs aimed at diversifying its export base, including the simplification of export procedures and the provision of incentives for small and medium-sized enterprises (SMEs) to enter international markets. While these programs have led to some diversification, Brazil continues to face challenges related to infrastructure and regulatory complexities that hinder the full potential of export diversification. India’s “Make in India” initiative and the EU’s Single Market reforms similarly aimed at reducing regulatory barriers but faced hurdles such as infrastructure limitations and differing national regulations, respectively. These experiences provide valuable insights into the potential and challenges of export diversification in the context of institutional reforms.

3. 3. The exposition of the theoretical model is well founded. The conceptual framework explaining the mechanisms by which RSDOs influence export diversification should be more clearly detailed, emphasizing the causal links between variables and providing specific examples to support the hypotheses formulated.

Reply: Thank you very much for your valuable feedback on the theoretical model part of our research. In response to your suggestions regarding the conceptual framework, the causal relationships of variables, and the specific examples supporting the hypothesis that RSDO (Related Diversification) affects the export diversification mechanism, we have conducted in-depth analysis and made appropriate modifications. The revisions are as follows:

L303-311: In policy recommendations for promoting export diversification, governments should place greater emphasis on improving product quality and fostering innovation. The success of RSDO reforms lies not only in the growth in the number of products but also in the innovation-driven export diversification. Governments should further streamline administrative processes, enhance intellectual property protection, and reduce innovation costs to provide stronger support for enterprise innovation. Particularly for small and medium-sized enterprises (SMEs), governments can help reduce barriers to entering new markets, assisting them in improving product innovation and competitiveness, thereby driving higher-quality export diversification.

L327-336: When analyzing export diversification, although the number of export products is a fundamental measure, we must also consider product quality and innovation. Product quality and innovation are critical drivers of export diversification, as they not only determine a product’s competitiveness in international markets but also directly impact whether enterprises can enter new markets and maintain their market share. To achieve long-term export diversification, enterprises must continuously focus on improving product quality and fostering innovation, developing unique and high-value-added products. Through innovation, enterprises can not only increase the variety of export products but also en-hance market share and enter higher-end markets.

L369-377: RSDO reforms, by simplifying administrative processes and lowering market entry barriers, have reduced operational costs for enterprises, creating favorable conditions for innovation and product quality improvement. Enterprises can allocate the cost savings to re-search and development and technological innovation, thereby enhancing product quality and competitiveness. This not only helps enterprises expand product variety in existing markets but also promotes their entry into new international markets. By providing a more equitable and competitive market environment, RSDO reforms encourage enterprises to drive export product diversification through innovation.

L409-410:

 

(a)

Figure 1. Theoretical framework for analyzing the impact of the RSDO on the export diversification of wood-processing enterprises.

 

4. This section is well structured but could be improved by a more detailed explanation of the data sources used. For example, instead of stating generically that the data come from the "China Industrial Enterprises Database (2014)", a brief discussion of their representativeness, the sample selection criteria and potential limitations associated with the use of this dataset would be useful. In addition, the descriptive analysis could be enriched by including graphical visualizations (such as histograms, scatter plots or box-plots) to illustrate the distribution of the key variables and allow a better understanding of the relationships between them.

Reply: Thank you for the expert's opinion. Based on your feedback, I have removed the vague description of the database. And supplemented its limitations on the basis of describing the representativeness of the data and sample selection criteria.

L576-578: The survey involves 6,144 enterprises, covering all 31 provincial-level administrative units (excluding Hong Kong, Macau, and Taiwan), 236 postal areas, and 538 counties. This county encompasses counties with high, medium, and low levels of economic development, effectively ensuring the representativeness of the data.

L585-586: Data processing is done following the approach of Lin et al. [46].

L595-598: We obtained a dataset of 2,143 companies with export businesses, distributed across 23 provinces and 103 prefecture-level cities.

L603-606: Despite the limitations of the 2014 dataset, such as its restriction to a single year, which may limit the observation of the long-term effects of RSDO, its representativeness, timeliness, and comprehensiveness render it a suitable choice for evaluating the impact of RSDO on export diversification.

L638-648: Figure 2 shows the scatter plots between each dependent variable and the RSDO. The fitting value curves that slope upwards to the right in the four graphs indicate that in regions with a better "RSDO", the level of WPEs’ export diversification is higher. It can be preliminarily concluded that the RSDO has a positive effect, which still needs to be scientifically tested through econometric analysis.

 

 

1. Number of export productsand the RSDO   b.Number of export marketsand the RSDO

 

1. Export product diversification index and the RSDO  d. Export market diversification indexand the RSDO

Figure 2. The scatter plots between each dependent variable and the RSDO.

 

5. 5. The empirical analysis is detailed and methodologically sound, but the interpretation of the results could be extended to provide a deeper economic perspective. Instead of just presenting the coefficients of the econometric estimates, it would be useful to discuss their implications in practical terms. For example, what does it mean, in economic terms, that the DSAB reform has a significant effect on the diversification of exported products but not on the diversification ofexport markets? The possible mechanisms driving this result should be clearly explained and reference should be made to similar studies to validate or contradict these conclusions. Also, integrating a comparative discussion with the results of other studies could increase the robustness of the argument.

Reply: Thank you very much for your affirmation and valuable suggestions on our empirical analysis section. In response to your suggestions regarding the interpretation of the results, we have made the following supplements and improvements. We have not only displayed the econometric estimation coefficients but also further discussed the practical economic significance of the results. Additionally, we have conducted a detailed analysis of the possible mechanisms that led to DSAB having a significant impact on the diversification of export products but not on the diversification of export markets. The specific content is as follows:

L683-695: Economically, the results suggest that RSDO enhances innovation opportunities for businesses by optimizing the business environment through measures such as streamlining and accelerating approval processes, ensuring fair regulation, and improving public services. For example, canceling production license management for engineered wood products allows enterprises to respond quickly to market demands and profit from it [51]. The positive effects of the RSDO create a favorable business environment, which helps enterprises establish optimistic expectations and encourages them to increase product development efforts rather than waiting and observing [52]. The above conclusion is generally consistent with the literature on how the institutional environment [6,53], business environment [9,29], and trade facilitation [7,8,40] impact the increase in export products at the national or enterprise level. Optimizing the business environment can lower both fixed and variable costs for enterprises, thereby facilitating their entry into new markets and the development of new products.

L721-723: The 'Streamline Administration and Delegate Power' reform has consistently enhanced the quality of export products and market diversification for WPE, as shown in Tables 3 and 4.

 

6. 6. The conclusions of the study are well formulated, but should be more closely related to the original objectives and hypotheses. In addition, the practical implications of the research should be more clearly developed by formulating specific policy recommendations. At present, the section contains general suggestions, but a more detailed analysis of how institutional factors can be optimized to enhance export diversification would be of great value. It would also be useful to add a discussion of the study's limitations and future research directions, suggesting possible extensions to the analysis, such as using more recent data or applying the methodology to other industries.

Reply: Thank you very much for your valuable feedback and suggestions on our research conclusion section. In response to your feedback, we have further refined and expanded the research conclusions. The modifications are briefly outlined as follows:

L870-871: By reducing enterprises' export-related costs, this reduction stimulates their incentive to pursue new markets and innovate products.

L892-911: RSDO has significantly enhanced the diversification of export markets for enterprises through technological innovation. Local governments are advised to bolster enterprise technological innovation via policy support, including R&D subsidies and incentives for technology introduction. Additionally, fostering cooperation among enterprises, universi-ties, and research institutions to establish an integrated industry-academia-research system can further strengthen the international competitiveness of enterprises.

This study is subject to limitations regarding data timeliness; the 2014 data utilized may not adequately capture the recent effectiveness of the RSDO reform. Future research is advised to incorporate more recent data to assess its long-term impact. Additionally, the study's focus on the wood products industry restricts the generalizability of the findings. Future research should extend to other manufacturing and service industries to validate the broader applicability of RSDO. The absence of detailed enterprise-level cost and technological innovation data may also hinder in-depth mechanism analysis. Therefore, future studies should leverage more granular enterprise survey data to examine the impact of RSDO on corporate behavior. Potential future research directions include multi-industry comparative analysis, long-term effect analysis, policy interaction effect research, and international comparative studies. These approaches will enhance the understanding of RSDO's influence on export diversification and offer more targeted policy recommendations.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

This manuscript investigates the impact of China’s RSDO reform on export diversification among wood-processing enterprises. Using firm-level data from 2014, the study employs Zero-truncated Negative Binomial Regression and the Tobit model to evaluate the effects of prefecture-level RSDO on both export product and market diversification. The results indicate that RSDO positively influences export product diversification but does not significantly affect export market diversification. Overall, the manuscript presents a well-structured empirical study on an important policy reform, but there are several areas that require improvement before the manuscript is suitable for publication.

 

I have the following comments that I would like to share to improve the manuscript.

 

- The analysis is based on a single-year dataset (2014), but the impact of institutional reforms often unfolds over a longer period. If longitudinal data is unavailable, the authors should at least discuss potential long-term effects with relevant literature. Such data limitation should be acknowledged more explicitly and discussed how it might affect the findings. Also, readers may wonder whether the 2014 data remains relevant today.

 

- The paper finds that RSDO has no significant effect on export market diversification and that government service optimization shows no significant impact, which seems to contradict some existing literature. These "non-findings" deserve more thorough discussion.

 

- Although the authors address endogeneity using instrumental variables for the Tobit model, similar issues might exist in the zero-truncated negative binomial regression. The authors might give a short discussion for a clarification.

 

- Also, in the introduction, the authors should provide more contextual background why wood-processing enterprises were chosen as the focus of this study, given that RSDO likely impacts various industries.

 

- Finally, the manuscript would be strengthened by more directly comparing the Chinese RSDO reform with similar institutional reforms in other countries or regions. This would help contextualize the findings and increase their international relevance, especially for readers less familiar with China's specific institutional environment.

Comments on the Quality of English Language

The English could be improved to more clearly express the research.

Author Response

Dear editor and reviewers,

 We are truly grateful to yours and reviewers’ critical comments and thoughtful suggestions for our manuscript entitled “Can the reform of "Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services" help drive export diversification of wood-processing enterprises?” (ID: forests-3542643). Based on these comments and suggestions, we have made careful modifications on our manuscript. The changes based on reviewers was marked in red color. We hope the revised manuscript will meet your magazine’s standard. On behalf of all the authors of this article, I would like to express my gratitude to the three reviewers for their suggestions not only to make our article better, but also to increase the breadth and depth of our research. I will answer each reviewer's questions and comments one by one.

 

Sincerely yours,

Weiming Lin

Fujian Agriculture and Forestry University

1. This manuscript investigates the impact of China’s RSDO reform on export diversification among wood-processing enterprises. Using firm-level data from 2014, the study employs Zero-truncated Negative Binomial Regression and the Tobit model to evaluate the effects of prefecture-level RSDO on both export product and market diversification. The results indicate that RSDO positively influences export product diversification but does not significantly affect export market diversification. Overall, the manuscript presents a well-structured empirical study on an important policy reform, but there are several areas that require improvement before the manuscript is suitable for publication.

I have the following comments that I would like to share to improve the manuscript.

- The analysis is based on a single-year dataset (2014), but the impact of institutional reforms often unfolds over a longer period. If longitudinal data is unavailable, the authors should at least discuss potential long-term effects with relevant literature. Such data limitation should be acknowledged more explicitly and discussed how it might affect the findings. Also, readers may wonder whether the 2014 data remains relevant today.

Reply: We sincerely thank the reviewer for raising this important concern. By acknowledging the limitation of using a single-year dataset and providing a clearer justification for the relevance of the 2014 data, we have strengthened the manuscript’s argument. We have also expanded the discussion on the potential long-term effects of the reform and suggested directions for future research to further investigate these effects. We hope that these revisions adequately address the reviewer’s concerns and improve the manuscript’s contribution to the literature. If you have any additional comments or further suggestions, we would be happy to incorporate them.

We fully understand your concerns about the potential timeliness issues arising from the research period ending in 2014 and have provided a detailed explanation in the manuscript.  Despite this limitation, the 2014 dataset remains highly relevant for understanding the early impacts of RSDO, as it captures the immediate effects of reforms implemented in 2013-2014, including the cancellation or delegation of 468 administrative approval items by the State Council. We explain that the 2014 dataset serves as an important starting point for understanding how firms responded to the RSDO reform during its early stages. Even though the full effects of the reform will take time to fully manifest, the 2014 data allows us to identify early indicators of the reform’s effectiveness. As businesses adapted to new administrative processes, the data reflects their initial efforts to overcome regulatory challenges and explore new export opportunities. Moreover, the policy changes implemented in 2014, such as the reduction of administrative approval items and the promotion of market liberalization, are foundational elements that continue to shape the business environment in China. Therefore, understanding the immediate effects of these reforms provides critical insights for future policies, as many of these structural changes are still ongoing and evolving in 2025.

L576-579: The survey involves 6,144 enterprises, covering all 31 provincial-level administrative units (excluding Hong Kong, Macau, and Taiwan), 236 postal areas, and 538 counties. This county encompasses counties with high, medium, and low levels of economic development, effectively ensuring the representativeness of the data.

L595-602: Then, the data were matched based on the enterprise name with the 11,353 WPEs, and samples with duplicate company names were removed. We obtained a dataset of 2,143 companies with export businesses, distributed across 23 provinces and 103 prefecture-level cities. Fourth, prefecture-level cities’ total and per capita GDP data come from the "China City Statistical Yearbook (2015)". The longitude and latitude of ports and the government locations of prefecture-level cities are based on Google Maps, and port data comes from the Ministry of Transport's 2006 "National Coastal Port Layout Plan."

L603-606: Despite the limitations of the 2014 dataset, such as its restriction to a single year, which may limit the observation of the long-term effects of RSDO, its representativeness, timeliness, and comprehensiveness render it a suitable choice for evaluating the impact of RSDO on export diversification.

L611-612: Second, the effectiveness of the RSDO had entered its visible stage, and the surveyed enterprises could perceive and evaluate it.

2. The paper finds that RSDO has no significant effect on export market diversification and that government service optimization shows no significant impact, which seems to contradict some existing literature. These "non-findings" deserve more thorough discussion.

Reply: The paper finds that RSDO has no significant effect on export market diversification and that government service optimization shows no significant impact, which seems to contradict some existing literature. These "non-findings" deserve more thorough discussion.

Reply: We greatly appreciate the reviewer’s insightful feedback. We recognize that these findings seem to contradict some existing literature, and we agree that a more thorough discussion is necessary to contextualize these results. Below, we outline our response to the reviewer’s comment and provide a detailed explanation of the relevant changes and additions to the manuscript.

L843-854: Specifically, we hypothesize that the export market diversification of wood-processing enterprises may be more constrained by external factors (e.g., international demand fluctuations, trade barriers, and industry-specific restrictions) than by regional administrative reforms. In this sector, many enterprises, especially those involved in processing trade, may have limited control over their export market choices due to contractual obligations with foreign parent companies or the nature of their export agreements. Additionally, we argue that the impact of RSDO on export market diversification may take longer to manifest, as firms often require a period of time to build relationships and establish a market presence in new regions. The non-significant effect could be an indication that market diversification in this industry is not immediately influenced by administrative changes alone, and that other market-driven and industry-specific factors are more dominant in the short term.

 

3. Although the authors address endogeneity using instrumental variables for the Tobit model, similar issues might exist in the zero-truncated negative binomial regression. The authors might give a short discussion for a clarification.

Reply: We have conducted a supplementary test on this. Thank you very much for the reminder.

L478-486: First, the two-step method of endogeneity Hausman test proposed by Wooldridge is selected to test endogeneity problems of equation (3) [42] . In the first step, regression is carried out with the RSDO as dependent variable and instrumental variable as well as other existing control variables as independent variables to obtain the residual term. In the second step, residual term is incorporated into equation (3). The results show that regression coefficients of residual term are respectively -1.044 (P-value being 0.721) and -0.679 (0.669) for the equation with export product diversification index and export market diversification index as dependent variable, indicating that the RSDO can be regarded as an exogenous variable.

4. Also, in the introduction, the authors should provide more contextual background why wood-processing enterprises were chosen as the focus of this study, given that RSDO likely impacts various industries.

Reply: We appreciate the reviewer’s valuable comment and have now explicitly addressed the contextual background for focusing on wood-processing enterprises in the introduction. This revision provides a clearer rationale for why the wood-processing sector is an important area of study for understanding the impacts of RSDO reforms on export diversification. By explaining the regulatory challenges specific to this industry, we highlight the relevance and potential impact of administrative reforms in this sector.

We hope that this addition strengthens the manuscript and provides further clarity for readers. If the reviewer has any additional comments or suggestions, we would be happy to continue refining the manuscript.

L98-109: The wood-processing industry in China has long been subject to complex and often burdensome administrative procedures, including regulations on logging, wood processing, and export licensing. These regulatory challenges have contributed to high transaction costs and limited the flexibility of enterprises to respond to changing international market demands. Given these challenges, the RSDO reforms, which aim to simplify administrative processes, reduce regulatory burdens, and promote market liberalization, are of particular relevance to this sector. By focusing on wood-processing enterprises (WPEs), this study seeks to examine how these reforms can alleviate the regulatory obstacles faced by the industry and foster greater export diversification. Furthermore, as a major sector in China’s manufacturing industry, WPEs provide a clear example of how institutional reforms can enhance operational efficiency, stimulate product innovation, and open up new market opportunities in the global economy.

5.Finally, the manuscript would be strengthened by more directly comparing the Chinese RSDO reform with similar institutional reforms in other countries or regions. This would help contextualize the findings and increase their international relevance, especially for readers less familiar with China's specific institutional environment.

Reply: We sincerely appreciate the reviewer’s insightful suggestion to include a comparative analysis of China’s RSDO reform with similar institutional reforms in other countries or regions. This addition will not only contextualize our findings but also enhance their international relevance, especially for readers less familiar with China's specific institutional environment. To address this, we have expanded the manuscript to include a comparative discussion of China’s RSDO reform alongside institutional reforms in other countries that aim to enhance export diversification through administrative simplification and improved business environments.

L228-245: Launched in 2013, the RSDO reform in China focuses on streamlining administrative procedures, delegating powers, and optimizing services to reduce institutional costs for enterprises. By July 2014, the State Council had abolished or delegated 468 administrative approval items, and provincial governments had canceled, delegated, or simplified a total of 4,350 approval items. The reform aimed to alleviate regulatory burdens, thereby enabling enterprises to diversify their export markets and products. However, regional differences in the implementation of the RSDO have led to varying impacts on export diversification across different prefecture-level cities. Brazil has implemented various programs aimed at diversifying its export base, including the simplification of export procedures and the provision of incentives for small and medium-sized enterprises (SMEs) to enter international markets. While these programs have led to some diversification, Brazil continues to face challenges related to infrastructure and regulatory complexities that hinder the full potential of export diversification.India’s “Make in India” initiative and the EU’s Single Market reforms similarly aimed at reducing regulatory barriers but faced hurdles such as infrastructure limitations and differing national regulations, respectively. These experiences provide valuable insights into the potential and challenges of export diversification in the context of institutional reforms.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

Review Report on the Reform of 'Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services' and Its Impact on Export Diversification of Wood-Processing Enterprises

I have had the opportunity to review this manuscript and would like to commend the authors for tackling an important and timely subject regarding the influence of the 'Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services' (RSDO) reform on the export diversification of wood-processing enterprises. However, there are several aspects that necessitate substantial revisions before the paper can be considered for further assessment in the review process. Below, I present a detailed critique that highlights weaknesses and offers suggestions for enhancement.

 

1. The manuscript seeks to establish connections between institutional reforms and export diversification but lacks a solid theoretical basis. Although relevant theories such as trade openness, institutional quality, and economic liberalization are referenced, they are not effectively woven into the study’s conceptual framework. Consequently, I will strongly advise that authors take their time improve on this area by providing strong and compelling arguments in integrating the three fundamental theories to this subject matter. These are: Institutional Economics Theory, Dynamic Capabilities Theory, and New Trade Theory. I am sure that this suggestion will help the paper provide a clearer explanation of the relationship between administrative reforms and export diversification.
2. I am very surprised that despite the novelty that this paper seeks to contribute, the authors did disservice to the paper by relenting on data from only one year, which is inadequate for capturing long-term trends and the effects of policy changes. Furthermore, the emphasis on a specific geographical area restricts the study’s relevance to other economies and policy environments. More worrisome is fact that the paper used more than a decade year outdated data (2014) to provide policy implications for advancing the subject in 2025. This is indeed unacceptable.

To enhance the validity of your findings, I will advise you do either of the following:

- Broaden the dataset to encompass multiple years of data to evaluate trends and long-term effects.

- Explore a comparative analysis by examining similar economies or regions that have implemented administrative reforms.

- Provide strong and compelling arguments on why your 2014 dataset fits well for policy implications in 2025 and beyond. For instance, the fact that the depends on survey data based administered through questionnaires could be a good point, but the year difference requires more elaboration.

4. Seeing that the assessment of export diversification focuses on the number of products rather than their quality, innovation, or competitiveness in the market makes the policy outcomes challenging. Howver, a good argument can clarify this matter.

 

 

5. Although some control variables are considered, the study fails to address significant macroeconomic and geopolitical factors that could affect the connection between administrative reforms and export diversification. If time permits the authors, considering controls for fluctuations in exchange rates, foreign direct investment (FDI), and global trade trends may be a very good option.
6. methodologically, adopting instrumental variable regression or difference-in-differences methodologies to improve causal inference will look good.
7. Discussion of the results should be improved and the policy implications should be derived from the findings.

On the last note, I would like to state that while this manuscript tackles a significant subject; there are several key aspects that need considerable revision. Improving the theoretical framework, broadening the dataset, fine-tuning variable measurements, adding more controls, clarifying the results, and bolstering the literature review will greatly enhance the quality and influence of the paper. I urge the authors to thoughtfully integrate these recommendations to enhance their research and ensure its relevance to academic and policy debates regarding trade and economic development.

Comments on the Quality of English Language

The English can be improved

Author Response

Dear editor and reviewers,

 

We are truly grateful to yours and reviewers’ critical comments and thoughtful suggestions for our manuscript entitled “Can the reform of "Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services" help drive export diversification of wood-processing enterprises?” (ID: forests-3542643). Based on these comments and suggestions, we have made careful modifications on our manuscript. The changes based on reviewers was marked in red color. We hope the revised manuscript will meet your magazine’s standard. On behalf of all the authors of this article, I would like to express my gratitude to the three reviewers for their suggestions not only to make our article better, but also to increase the breadth and depth of our research. I will answer each reviewer's questions and comments one by one.

 

Sincerely yours,

Weiming Lin

Fujian Agriculture and Forestry University

 

Reviewer: 3

Comments and Suggestions for Author

 

I have had the opportunity to review this manuscript and would like to commend the authors for tackling an important and timely subject regarding the influence of the 'Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services' (RSDO) reform on the export diversification of wood-processing enterprises. However, there are several aspects that necessitate substantial revisions before the paper can be considered for further assessment in the review process. Below, I present a detailed critique that highlights weaknesses and offers suggestions for enhancement.

 

1.The manuscript seeks to establish connections between institutional reforms and export diversification but lacks a solid theoretical basis. Although relevant theories such as trade openness, institutional quality, and economic liberalization are referenced, they are not effectively woven into the study’s conceptual framework. Consequently, I will strongly advise that authors take their time improve on this area by providing strong and compelling arguments in integrating the three fundamental theories to this subject matter. These are: Institutional Economics Theory, Dynamic Capabilities Theory, and New Trade Theory. I am sure that this suggestion will help the paper provide a clearer explanation of the relationship between administrative reforms and export diversification.

Reply: We would like to express our gratitude for your insightful comments and valuable feedback on our manuscript. We appreciate your positive remarks on the importance and timeliness of our subject regarding the influence of the 'Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services' (RSDO) reform on the export diversification of wood-processing enterprises. We also acknowledge the need to strengthen the theoretical foundation of our paper and agree that a more coherent integration of relevant theories would improve the overall quality of the study.

 

L264-300: In March 2013, the Chinese government launched a commitment to reduce at least one-third of administrative approval items across all departments of the State Council within five years, marking the beginning of the "Streamline Administration and Delegate Power" (RSDO) reform. This initiative aimed to enhance the efficiency and effectiveness of governance while fostering market-driven economic activities. As part of this broader effort, the Chinese government later introduced the "Improve Regulation" and "Optimize Services" reforms in 2015, which together form a comprehensive institutional framework. The core of the "Streamline Administration and Delegate Power" initiative lies in reducing administrative approvals and transferring non-essential government functions to the market, thereby alleviating constraints on businesses and allowing the market to take a more decisive role in resource allocation. This approach, consistent with "Institutional Economics Theory", aims to reduce transaction costs and increase economic efficiency, ultimately stimulating the vitality of market entities and fostering innovation. The "Improve Regulation" reform focuses on enhancing regulatory oversight during and after the business process, shifting from a model of "strict entry and loose regulation" to "loose entry and strict regulation." This shift seeks to foster fair competition, mitigate market distortions, and ensure that deregulation does not lead to chaotic market behavior. This aspect of the reform aligns with "Dynamic Capabilities Theory", which emphasizes how institutional improvements can strengthen firms’ capacities to innovate, adapt, and effectively compete in a newly liberated market environment. The "Optimize Services" component is designed to improve government service delivery by streamlining procedures, increasing service awareness, and introducing innovative methods of interaction with businesses. By ensuring that public services remain efficient and accessible even as administrative powers are reduced, this reform aims to avoid a "service vacuum" and ensure continued support for enterprise activities. This service optimization directly supports businesses' ability to engage in more agile market behavior and expansion, which is consistent with "New Trade Theory". The theory highlights how reducing operational costs and improving market access through enhanced governmental services can enable firms to diversify their products and markets, positioning them more effectively in global trade.

Together, these reforms aim to create a more business-friendly environment by reducing institutional and operational barriers, allowing firms to leverage market forces more effectively. By lowering administrative burdens, strengthening regulatory frameworks, and improving service delivery, the RSDO reforms enhance the overall competitiveness of enterprises, fostering export diversification and contributing to broader economic growth. This integrated approach not only aligns with theoretical frameworks but also provides a realistic and actionable pathway for promoting sustainable economic development in China.

 

2. I am very surprised that despite the novelty that this paper seeks to contribute, the authors did disservice to the paper by relenting on data from only one year, which is inadequate for capturing long-term trends and the effects of policy changes. Furthermore, the emphasis on a specific geographical area restricts the study’s relevance to other economies and policy environments. More worrisome is fact that the paper used more than a decade year outdated data (2014) to provide policy implications for advancing the subject in 2025. This is indeed unacceptable.

To enhance the validity of your findings, I will advise you do either of the following:

- Broaden the dataset to encompass multiple years of data to evaluate trends and long-term effects.

- Explore a comparative analysis by examining similar economies or regions that have implemented administrative reforms.

- Provide strong and compelling arguments on why your 2014 dataset fits well for policy implications in 2025 and beyond. For instance, the fact that the depends on survey data based administered through questionnaires could be a good point, but the year difference requires more elaboration.

Reply: We sincerely thank the reviewer for raising this important concern. By acknowledging the limitation of using a single-year dataset and providing a clearer justification for the relevance of the 2014 data, we have strengthened the manuscript’s argument. We have also expanded the discussion on the potential long-term effects of the reform and suggested directions for future research to further investigate these effects. We hope that these revisions adequately address the reviewer’s concerns and improve the manuscript’s contribution to the literature. If you have any additional comments or further suggestions, we would be happy to incorporate them.

We fully acknowledge that using 2014 data, particularly in the context of policy implications for 2025, requires further elaboration. However, there are several compelling reasons why the 2014 dataset remains relevant for understanding the early effects of the RSDO reform and its implications for future policy.

Initial Stage of Reform: The RSDO reform officially began in 2013, and 2014 was the first full year of its implementation. During this period, many businesses began to experience the early effects of the reform, especially in terms of regulatory simplification and the reduction of bureaucratic barriers. As a result, the 2014 data provides a crucial baseline for assessing how businesses initially responded to the reform.

Policy Implications for 2025: Although 2014 data is from the early stages of the reform, it provides valuable insights into the initial shifts in business behavior and attitudes towards the policy changes. Understanding the early reactions to the reform is essential for designing long-term policy strategies, as it can help policymakers identify potential barriers and opportunities that may emerge over time. The data thus serves as a foundation for future comparisons and can be used to track the evolution of the reform’s impact on export diversification.

Survey Methodology: The 2014 dataset is derived from the "National Private Enterprise Survey," which is a comprehensive survey administered to a large number of enterprises across China. The survey provides rich insights into how businesses perceive and respond to the RSDO reform. Since the survey directly captures the experiences and perceptions of enterprises, it is a highly relevant source of data for understanding the reform’s initial impact. The specific modifications are as follows:

L576-579: The survey involves 6,144 enterprises, covering all 31 provincial-level administrative units (excluding Hong Kong, Macau, and Taiwan), 236 postal areas, and 538 counties. This county encompasses counties with high, medium, and low levels of economic development, effectively ensuring the representativeness of the data.

L595-602: Then, the data were matched based on the enterprise name with the 11,353 WPEs, and samples with duplicate company names were removed. We obtained a dataset of 2,143 companies with export businesses, distributed across 23 provinces and 103 prefecture-level cities. Fourth, prefecture-level cities’ total and per capita GDP data come from the "China City Statistical Yearbook (2015)". The longitude and latitude of ports and the government locations of prefecture-level cities are based on Google Maps, and port data comes from the Ministry of Transport's 2006 "National Coastal Port Layout Plan."

L603-606: Despite the limitations of the 2014 dataset, such as its restriction to a single year, which may limit the observation of the long-term effects of RSDO, its representativeness, timeliness, and comprehensiveness render it a suitable choice for evaluating the impact of RSDO on export diversification.

L611-612: Second, the effectiveness of the RSDO had entered its visible stage, and the surveyed enterprises could perceive and evaluate it.

 

3. Seeing that the assessment of export diversification focuses on the number of products rather than their quality, innovation, or competitiveness in the market makes the policy outcomes challenging. However, a good argument can clarify this matter.

Although some control variables are considered, the study fails to address significant macroeconomic and geopolitical factors that could affect the connection between administrative reforms and export diversification. If time permits the authors, considering controls for fluctuations in exchange rates, foreign direct investment (FDI), and global trade trends may be a very good option. Methodologically, adopting instrumental variable regression or difference-in-differences methodologies to improve causal inference will look good.

Discussion of the results should be improved and the policy implications should be derived from the findings.

On the last note, I would like to state that while this manuscript tackles a significant subject; there are several key aspects that need considerable revision. Improving the theoretical framework, broadening the dataset, fine-tuning variable measurements, adding more controls, clarifying the results, and bolstering the literature review will greatly enhance the quality and influence of the paper. I urge the authors to thoughtfully integrate these recommendations to enhance their research and ensure its relevance to academic and policy debates regarding trade and economic development.

 Reply: We sincerely appreciate the reviewer’s insightful comment regarding the focus of our assessment on the number of products rather than considering their quality, innovation, or competitiveness in the market. We fully recognize that these factors are crucial for understanding the long-term impact of administrative reforms on export diversification, as the number of products alone does not fully capture the complexity of diversification in terms of product quality and competitiveness. We agree with the reviewer that focusing solely on product quantity can limit the depth of the analysis, especially in assessing the real impact of reforms on export diversification. Product quality and innovation are indeed critical to a comprehensive understanding of how enterprises expand their exports into new markets. As such, we acknowledge the need to refine our argument and clarify how product quality and innovation are connected to export diversification, and how they can complement our analysis of product variety.

L303-311: In policy recommendations for promoting export diversification, governments should place greater emphasis on improving product quality and fostering innovation. The success of RSDO reforms lies not only in the growth in the number of products but also in the innovation-driven export diversification. Governments should further streamline administrative processes, enhance intellectual property protection, and reduce innovation costs to provide stronger support for enterprise innovation. Particularly for small and medium-sized enterprises (SMEs), governments can help reduce barriers to entering new markets, assisting them in improving product innovation and competitiveness, thereby driving higher-quality export diversification. 

L327-336: When analyzing export diversification, although the number of export products is a fundamental measure, we must also consider product quality and innovation. Product quality and innovation are critical drivers of export diversification, as they not only determine a product’s competitiveness in international markets but also directly impact whether enterprises can enter new markets and maintain their market share. To achieve long-term export diversification, enterprises must continuously focus on improving product quality and fostering innovation, developing unique and high-value-added products. Through innovation, enterprises can not only increase the variety of export products but also enhance market share and enter higher-end markets.

L369-377: RSDO reforms, by simplifying administrative processes and lowering market entry barriers, have reduced operational costs for enterprises, creating favorable conditions for innovation and product quality improvement. Enterprises can allocate the cost savings to research and development and technological innovation, thereby enhancing product quality and competitiveness. This not only helps enterprises expand product variety in existing markets but also promotes their entry into new international markets. By providing a more equitable and competitive market environment, RSDO reforms encourage enterprises to drive export product diversification through innovation.

The suggestions put forward by the experts are very reasonable. Thanks!  Among the control variables in this paper, there are 5 urban characteristic variables and 14 enterprise characteristic variables. It can also be seen from this that the latter are mainly considered, because this paper focuses on the export diversification of micro enterprises. Therefore, in our subsequent relevant research on urban export diversification, we will incorporate the control variables mentioned by the experts. In addition, this paper has already examined the endogeneity issue of the model and concludes that the RSDO is not an endogenous variable.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

The article has been significantly improved. I suggest publishing it in this form.

Reviewer 3 Report

Comments and Suggestions for Authors

The paper has been improved. Hence, I recommend that it should be accepted.