Chinese competition: intra-industry and intra-firm adaptation
- 33 Downloads
This paper quantifies how a small and open economy adapts and thereby shapes to what extent it is exposed to competition from China on the world market. Starting from granular firm-commodity-destination-level sales data for the universe of Danish manufacturing firms we construct counterfactual competition exposure, measured as sales weighted Chinese import shares in the home and all export markets while holding the industry composition, the product as well as the destination mix constant. Without adaptation the competition shock after China’s WTO accession would have been more than one and a half times of what has been readily observable. Besides broad industry-level structural change, intra-industry reallocations and intra-firm adjustments through product and destination switching are important adaptation channels. Furthermore, we find some evidence for dynamic quality differentiation as a relevant adaptation margin.
KeywordsImport competition Competition exposure China Structural change Product similarity
JEL ClassificationF1 L1 L6
The authors acknowledge financial support from the Tuborg Foundation.
- Ashournia, D., Munch, J., & Nguyen, D. (2017). The impact of Chinese import penetration on Danish firms and workers. Mimeo.Google Scholar
- Autor, D. H., Dorn, D., Hanson, G. H., & Majlesi, K. (2016a). Importing political polarization? The electoral consequences of rising trade exposure (Working Paper 22637). NBER. https://doi.org/10.3386/w22637.
- Autor, D. H., Dorn, D., Hanson, G. H., Pisano, G., & Shu, P. (2016b). Foreign competition and domestic innovation: Evidence from US patents (Working Paper 22879). NBER. https://doi.org/10.3386/w22879.
- CEPII. (2014). International trade database at the product-level. http://www.cepii.fr/CEPII/en/bdd_modele/presentation.asp?id=1. Accessed 2 July 2014.
- Dippel, C., Gold, R., & Heblich, S. (2015). Globalization and its (dis-) content: Trade shocks and voting behavior (Working Paper 21812). NBER. https://doi.org/10.3386/w21812.
- Gaulier, G., & Zignago, S. (2010). Baci: International trade database at the product-level. The 1994–2007 version (CEPII Working Paper 23). https://doi.org/10.2139/ssrn.1994500.
- Head, K., & Mayer, T. (2014). Gravity equations: Toolkit, cookbook, workhorse. In G. Gopinath, E. Helpman, & K. Rogoff (Eds.), Handbook of international economics (Vol. 4). Amsterdam: Elsevier.Google Scholar
- Henn, C., Papageorgiou, C., Romero, J. M., Spatafora, N. (2017). Export quality in advanced and developing economies (World Bank Policy Research Working Paper, 8196). https://doi.org/10.1596/1813-9450-8196.
- Pierce, J. R., & Schott, P. K. (2012). Concording US harmonized system categories over time. Journal of Official Statistics, 28(1), 53–68.Google Scholar
- Piveteau, P., & Smagghue, G. (2017). Estimating firm product quality using trade data. Mimeo.Google Scholar
- Statistics Denmark. (2017). Manufacturers’ sales by industry (db07) and type of turnover. https://www.statbank.dk/statbank5a/SelectTable/Omrade0.asp?SubjectCode=11&Planguage=1. Accessed 27 June 2017.
- The Economist. (2016). Why they’re wrong.Google Scholar
- Utar, H. (2018). Workers beneath the floodgates: Low-wage import competition and workers adjustment. Review of Economics and Statistics. https://doi.org/10.1162/rest_a_00727.
- Van Beveren, I., Bernard, A. B., & Vandenbussche, H. (2012). Concording eu trade and production data over time (Working Paper 18604). NBER. https://doi.org/10.3386/w18604.
- World Bank. (2016). World development indicators. http://data.worldbank.org. Accessed 11 October 2016.