China’s Agricultural Exports and their Effects on other Exporters

This paper critically investigates the effects of China’s agricultural exports on its competitors in third markets in a global context for the 1993-2012 period. We estimate a gravity equation using 6-digit HS classification data of China and 25 major exporters to the top 50 markets. Using instruments for China’s bilateral exports we find that China’s agricultural exports have both complementary and displacement effects on certain exporter groups in third markets. US, Asian and OECD exports are generally promoted by China’s export expansion on both margins while Latin American and African exports are displaced by China’s agricultural products. There is strong evidence of displacement effects in African market on the intensive margin and in Latin American market on the extensive margin. Most exporters are positively influenced in Asian and OECD markets. In addition, China’s key agricultural products in animals and meat; and fruit and vegetables have strong competition power to most China’s rivals on both margins. Although complementary effects are generally found in grains and other products on both margins, China displaces these products from all of its competitors in Latin American markets on the extensive margin. In brief, although heterogeneous effects of China’s agricultural exports in third markets and sectors are found but complementary effects of China’s products are more significant and stronger.