A Review on China's Exports and Crowding-Out Effects

Abstract

Export-led growth strategies have become the main paradigm for developing countries seeking to achieve higher economic growth. While exports are key to generating income, there are concerns regarding limitations in external demand. Specifically, China’s remarkable export performance has been at the center of debates that revolve around possible export displacement effects on other countries. This study reviews this literature on export-led growth and crowding-out effects induced by China’s growing exports on various countries and regions. Moreover, reflecting dynamic changes in export structure, lists of key products for Chinese exports are provided. While using the 4-digit level Harmonized System (HS) classification, the selection of the products is based on improvements in revealed comparative advantage (RCA) over the period from 2009 to 2018 and is specific to China’s top three sectors with the largest global market shares: textile, electronics and machinery. Additionally, lists of competitor, potential competitor and potential loser countries are identified in the markets for these specified key products. The findings demonstrate increased competitive pressures on more advanced countries in connection with the increased sophistication of Chinese exports.