The “China Effect” on EU Exports to OECD Markets: A Focus on Italy

Abstract

This paper analyzes the indirect impact of China on the export performance of major European countries (Italy, France, Germany and Spain) in their main destination markets (OECD countries). Given a strong specialization in manufacturing sector, these EU countries are likely to be at risk from China's competition, especially in consumer goods. The heterogeneity in the production (and export) structures of EU countries makes Italy, whose productive structure is based on so-called "traditional" sectors, most vulnerable to China's competitive pressure. Using data for the period 1995-2009, this paper estimates the possible displacement effect at sector level. Results show that there is a considerable variation in different EU countries' exposure to China's competition and that, in some sectors the Chinese exports effect is, indeed, strong. This is particularly true for the more recent period, after China has entered WTO and for Italy, both in traditional and more capital intensive sectors.

The Chinese Export Displacement Effect Revisited: The Case of the East African Community

“…A group of related studies has also estimated the effect of Chinese exports in a gravity model but without a focus on other Asian countries. Giovannetti et al (2013) estimated the eff ects of increasing Chinese exports on EU exports to OECD markets.…”

EU‐China trade and intra‐EU trade: Substitute or complementary?

“…Low-income countries exporting labor-intensive products were affected negatively, while high-income countries producing capitalintensive goods were affected positively. There is extensive literature on the quantity effects of China's exports to Europe, Asia, Africa, and Latin America, written by Jenkins and Edwards (2006), Greenaway et al (2008), Jenkins et al (2008) and Giovannetti et al (2012b).…”

Back on Track? A Macro–Micro Narrative of Italian Exports

“…33 Several studies suggest that the "China shock" and, more generally, the increasing competition of low-wage countries did indeed have a significant impact on advanced economies (for a survey, see Autor, Dorn and Hanson, 2016). Focusing on Italy, there is evidence of an impact on sector-level productivity (Bugamelli and Rosolia, 2006;Bugamelli, Schivardi and Zizza, 2009), on firms' pricing strategies (Bugamelli, Fabiani and Sette, 2015), on output and employment in the manufacturing sector, including inter-sectoral effects via input-output linkages (Federico 2014), on exports (Giovannetti, Sanfilippo and Velucchi, 2011) and on export unit values (Giovannetti and Sanfilippo, 2016). 34 The analysis is based on more than 4,500 products defined at the HS 6-digit level.…”