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China shock on Japanese firms: Firms’ differential reactions to the increase in Chinese imports

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  • Tadashi ITO
  • Toshiyuki MATSUURA

Abstract

This study investigates the impact of import competition from China, using the firm/establishment level data from the Census of Manufacturer with a particular focus on firms’ choice of multiple reactions. We find that product switching is an important reaction for firms facing increasingly harsh competition with imports from China. Firms tend to choose, first, employment adjustment only, and then with stronger import competition, product switching only, and finally, both of employment adjustment and product switching as import competition from China increases.

Suggested Citation

  • Tadashi ITO & Toshiyuki MATSUURA, 2022. "China shock on Japanese firms: Firms’ differential reactions to the increase in Chinese imports," Discussion papers 22036, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:22036
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    File URL: https://www.rieti.go.jp/jp/publications/dp/22e036.pdf
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    References listed on IDEAS

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    3. Morikawa, Masayuki, 2016. "Factoryless goods producers in Japan," Japan and the World Economy, Elsevier, vol. 40(C), pages 9-15.
    4. Hayakawa, Kazunobu & Ito, Tadashi & Urata, Shujiro, 2021. "Impacts of increased Chinese imports on Japan’s labor market," Japan and the World Economy, Elsevier, vol. 59(C).
    5. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum, 2014. "The Rise Of The East And The Far East: German Labor Markets And Trade Integration," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1643-1675, December.
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