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On the Sources of China’s Export Growth


  • Roberto Álvarez
  • Sebastián Claro


We use detailed data on Chilean imports between 1990 and 2005 to analyze the causes of China’s import penetration relative to other countries. China exports a wide variety of products. The growth in China’s exports, however, is mainly driven by an increase in import penetration within common product categories with the rest of the world—the intensive margin—rather than by an increase in the number of product varieties exported—the extensive margin. Surprisingly, the growth in the intensive margin is explained by an increase in exported quantities without a significant fall in the relative price of Chinese varieties. This apparent paradox suggests that an increase in either the number of unobserved varieties or the willingness to pay for Chinese products—an increase in the relative quality of Chinese products—is the driving force behind China’s export performance. We present evidence regarding China’s export prices, the similarity of China’s export bundle to that of developed countries, and the relative quality of Chinese products, to conclude that improvements in the quality of Chinese products is an important dimension of Chinese export growth.

Suggested Citation

  • Roberto Álvarez & Sebastián Claro, 2007. "On the Sources of China’s Export Growth," Working Papers Central Bank of Chile 426, Central Bank of Chile.
  • Handle: RePEc:chb:bcchwp:426

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    References listed on IDEAS

    1. Sebastian Claro, 2009. "FDI Liberalization as a Source of Comparative Advantage in China," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 740-753, November.
    2. Castro, Lucio & Olarreaga, Marcelo & Saslavsky, Daniel, 2006. "The impact of trade with China and India on Argentina’s manufacturing employment," MPRA Paper 538, University Library of Munich, Germany.
    3. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    4. Peter K. Schott, 2008. "The relative sophistication of Chinese exports," Economic Policy, CEPR;CES;MSH, vol. 23, pages 5-49, January.
    5. Harrigan, James, 1997. "Technology, Factor Supplies, and International Specialization: Estimating the Neoclassical Model," American Economic Review, American Economic Association, vol. 87(4), pages 475-494, September.
    6. Barry Eichengreen & Yeongseop Rhee & Hui Tong, 2004. "The Impact of China on the Exports of Other Asian Countries," NBER Working Papers 10768, National Bureau of Economic Research, Inc.
    7. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants," Journal of International Economics, Elsevier, vol. 68(1), pages 219-237, January.
    8. Jorge Blázquez-Lidoy & Javier Rodríguez & Javier Santiso, 2006. "Angel or Devil? China's Trade Impact on Latin American Emerging Markets," OECD Development Centre Working Papers 252, OECD Publishing.
    9. 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.
    10. Álvarez, Roberto & Claro, Sebastián, 2009. "David Versus Goliath: The Impact of Chinese Competition on Developing Countries," World Development, Elsevier, vol. 37(3), pages 560-571, March.
    11. Leamer, Edward E, 1987. "Paths of Development in the Three-Factor, n-Good General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 961-999, October.
    12. 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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