Has China Displaced its Competitors in High‐tech Trade?

Abstract

Abstract This paper empirically investigated the extent to which China displaced its competitors in high‐tech exports using disaggregated data for the period 1992–2013. To address the endogeneity problem, we used a comprehensive set of instruments for Chinese high‐tech exports in relevant markets, including China's GDP and distances to those markets. Results of our IV regressions revealed that in most of the high‐tech sectors, Chinese exports had displaced the exports of its developing competitors such as India, South American exporters like Brazil and Mexico, and South‐East Asian countries like Malaysia, Singapore, Thailand and Vietnam, especially in the period prior to the 2007–08 global financial crisis. Yet, Chinese exports had been associated with more high‐tech exports of developed exporters like OECD countries, South Korea and Japan. Our findings suggest that while China became the world's top high‐tech exporter, its high‐tech exported products had been substitutes to those of other developing and emerging economies but complementary to that of developed economies.

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