Is China Relinquishing Manufacturing Competitiveness to Mexico in US Markets?

Abstract

The present paper expands on the understanding of the competition between China and Mexico in US markets. Using the OECD International Trade by Commodity Statistics covering the period 2002-2012, we undertake both relative-market-share analysis and constant-market-share analysis. Through comparison of market share changes at both macro and micro levels, we find that on the one hand China 's total negative impact on Mexican manufactured exports has been greatly reduced since 2007; on the other hand, China is increasingly aligned with Mexico in terms of its competitive position over the US market, consolidating its competitiveness in high and medium-to-high technology products and gaining market share in the US market, mainly at the expense of the most advanced economies. This changing pattern suggests the intensification of competition between Mexicoand China, but also a potential for cooperation, with the enhancement of bilateral intraindustry trade as a result of different technology choices and specialization paths.

Mexico and China in the US manufacturing market: An empirical analysis

“…In this context, shortly after entering the World Trade Organization (WTO) in December 2001, China notably began to perform better than Mexico in the US manufacturing market and this trend continued until 2007 (Gallagher et al, 2007;Gereffi, 2009), when the global economic crisis emerged. After 2007, China started to lose some steam while Mexico recovered some ground in the US manufacturing market (Lin, 2015). Although these findings are reasonably consistent with the evidence provided here, we also calculate import market shares growth rates and a measure of volatility for this variable, among other differences.…”

“…Several papers analyze the competition between Mexico and China in the US manufacturing market (Mesquita, 2007;Gallagher et al, 2007;Gereffi, 2009;Lin, 2015). Mesquita (2007) argues that China's international competitiveness, which is based on resource endowments, labor productivity growth, government incentives, and scale factors such as land area and population size, poses a significant threat to the manufacturing industry of Mexico and other Latin American countries.…”

Are China's Exports Crowding Out or Being Crowded Out? Evidence from Japan's Imports

“…Such dynamics in the Japanese market have occurred in other markets too. This has given rise to a literature studying the crowding-out effects of China's exports (Anh-Dao, 2010;Lin, 2015;Batista and Liu, 2017). Earlier studies with aggregate data often resulted in inconsistent findings.…”