China’s Displacement Effects on Asian Countries’ Exports: A Closer Look with Disaggregate data

This paper applies gravity model to disaggregate trade data to explore the differential impact of China’s exports displacement on product categories, classified by technology intensity and stages of production, over the period 1992-2006. We examine variations over time, including post China’s WTO accession, across markets and Asian exporters. Our results show that displacement due to China’s export surge occurs more in mediumand high-tech sectors rather than low technology manufactures, initially perceived as the most vulnerable. Crowding-out is more noticeable in developed country markets and second half of the period. We find high income countries to be more adversely affected, but this effect disappears post 2001. From a stage of production perspective, we find displacement to occur in semi-finished goods and little discernable effect on capital and consumption goods. In a separate section, we identify product categories where China offers export growth opportunities to its neighbours. These occur mainly in parts and components, automotive products and high-tech sectors.