Multinational Exposure and the Quality of New Chinese Exports

We exploit rich information on the geographic, product and trader characteristics of Chinese exports between 1997-2003 to examine how evolution in the city-industry presence of multinational firms influenced the quality, frequency and survival of new export transactions by private Chinese firms. Our analysis finds that increased contact with own-industry multinational firms was associated with more frequent, higher-valued, and longer-lasting new trade transactions. For example, a one standard deviation change in multinational presence was associated with a 3.6 percent increase in unit values and a 2 percent increase in the number of trade transactions introduced by private Chinese firms. Thus, the increasing presence of multinational firms appears to influence the pace and orientation of China’s integration with the world economy. JEL Codes: F1, F2