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The Impact of China on Low and Middle Income Countries’ Export Prices in Industrial-Country Markets

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  • Fu, Xiaolan
  • Kaplinsky, Raphael
  • Zhang, Jing

Abstract

This paper analyzes the unit prices of imports into the EU, Japan, and the US during 1989–2006 of manufactured products in which China specializes. It finds that imports from middle income countries are in close price competition with those from China and that there has been price competition between China and high-income countries in low-technology products. By contrast, the impact of China’s exports on low-income countries is not through price competition but through market expansion. China’s WTO entry had a once-for-all shock on the export prices of the high-income countries. The price competition effect of China’s exports weakened over the time period of 1989–2006, suggesting a gradual change in competition from price to nonprice factors such as quality and variety. If sustained, this trajectory poses an increasing competitive threat to high-income economies in the future.

Suggested Citation

  • Fu, Xiaolan & Kaplinsky, Raphael & Zhang, Jing, 2012. "The Impact of China on Low and Middle Income Countries’ Export Prices in Industrial-Country Markets," World Development, Elsevier, vol. 40(8), pages 1483-1496.
  • Handle: RePEc:eee:wdevel:v:40:y:2012:i:8:p:1483-1496
    DOI: 10.1016/j.worlddev.2012.04.001
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    References listed on IDEAS

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    Cited by:

    1. repec:hhs:bofitp:2013_018 is not listed on IDEAS
    2. Konstantins Benkovskis & Julia Wörz, 2016. "Non-price competitiveness of exports from emerging countries," Empirical Economics, Springer, vol. 51(2), pages 707-735, September.
    3. Adrian Wood, 2017. "Variation in structural change around the world, 1985–2015: Patterns, causes and implications," WIDER Working Paper Series 034a, World Institute for Development Economic Research (UNU-WIDER).
    4. repec:spr:empeco:v:53:y:2017:i:2:d:10.1007_s00181-016-1129-x is not listed on IDEAS
    5. Giorgia Giovannetti & Marco Sanfilippo, 2016. "China’s competition and the export price strategies of developed countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(2), pages 238-254, March.
    6. Konstantins Benkovskis & Julia Woerz, 2014. ""Made in China" - How Does it Affect Measures of Competitiveness?," Working Papers 2014/04, Latvijas Banka.
    7. Bernhard G. Gunter & Valeria Vargas Sejas, 2017. "Free Falling Terms of Trade Despite Industrialization: The Case of Bangladesh," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 33, Bangladesh Development Research Center (BDRC).
    8. Konstantīns Beņkovskis & Julia Wörz, 2015. "Summary Measure for Price and Non-price Competitiveness for ASEAN+3," Asian Economic Journal, East Asian Economic Association, vol. 29(2), pages 165-180, June.

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    Keywords

    unit prices; exports; competition; China;

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