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The relative sophistication of Chinese exports

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  • Peter K. Schott

Abstract

"China's exports have grown dramatically over the last three decades in large part due to its rapid penetration of new product markets. To help address the implications of this growth for developed economies, this paper gauges the relative sophistication of Chinese exports along two dimensions. First, I measure China's export overlap with developed countries by comparing the set of products China exports to the United States with the bundle of products exported by the OECD. Second, I compare Chinese and other countries' exports within product markets in terms of the price they receive in the US market. While China's export overlap with the OECD is much greater than one would predict given its low wages, the prices that US consumers are willing to pay for China's exports are substantially lower than the prices they are willing to pay for OECD exports. This fact, as well as the increase in the 'OECD premium' over time, suggests that competition between China and the world's most developed economies may be less direct than their product-mix overlap implies. It may also reflect efforts by developed-country firms to compete with China by dropping their least sophisticated offerings and moving up the quality ladder". Copyright (c) CEPR, CES, MSH, 2008..

Suggested Citation

  • Peter K. Schott, 2008. "The relative sophistication of Chinese exports," Economic Policy, CEPR;CES;MSH, vol. 23, pages 5-49, January.
  • Handle: RePEc:bla:ecpoli:v:23:y:2008:i::p:5-49
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    References listed on IDEAS

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    1. Alan V. Deardorff, 2014. "Local comparative advantage: Trade costs and the pattern of trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 9-35, March.
    2. Leamer, Edward E. & Maul, Hugo & Rodriguez, Sergio & Schott, Peter K., 1999. "Does natural resource abundance increase Latin American income inequality?," Journal of Development Economics, Elsevier, vol. 59(1), pages 3-42, June.
    3. Finger, J M & Kreinin, M E, 1979. "A Measure of 'Export Similarity' and Its Possible Uses," Economic Journal, Royal Economic Society, vol. 89(356), pages 905-912, December.
    4. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    5. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
    6. Peter K. Schott, 2004. "Across-Product Versus Within-Product Specialization in International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 647-678.
    7. Robert C. Feenstra & Andrew K. Rose, 2000. "Putting Things In Order: Trade Dynamics And Product Cycles," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 369-382, August.
    8. Courant, Paul N & Deardorff, Alan V, 1992. "International Trade with Lumpy Countries," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 198-210, February.
    9. Juan Carlos Hallak & Peter K. Schott, 2011. "Estimating Cross-Country Differences in Product Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 417-474.
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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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