The Impact of Chinese Import Competition on Transatlantic Manufacturing Trade

The Impact of Chinese Import Competition on Transatlantic Manufacturing Trade
Objectives
In recent years China became a powerful player in world trade. The enormous increase in the exports of Chinese manufacturing goods caused a fierce import competition effect that hurts many countries as well as many economic sectors. Not only does it have an impact on the domestic markets, but also on countries’ international export performance since firms are increasingly facing Chinese competition in other markets. In this paper we analyze the impact of Chinese import competition on the trade relationship between the European Union and the United States. Although this relationship is one of the most intense in world trade, it recently shows dynamics that may be related to the rise of China.
Data and Methods
In our analysis we focus on several aspects that characterize the transatlantic trade pattern, including the intensive and extensive margin of trade, the relative importance of intra-industry trade and the revealed comparative advantage of different industrial sectors. For this purpose we use information about detailed product-level trade flows from international databases like COMTRADE and COMEXT.
In particular we focus on differences between economic sectors in terms of the Chinese import competition they face and the dynamic effects that are caused by China’s international performance. We look for the factors that allow sectors to better cope with the challenges China is causing. These factors include technological progress, factor intensity, value added and the market structure of each sector.
Expected Results
Our results will allow us to measure the impact of Chinese import competition on the pattern of trade between the US and the EU. This includes evidence regarding the role of variety and quality of trade. In particular we will be able to assess the impact of different economic sectors.