Has China displaced other Asian countriesʹ exports?

This paper uses gravity modelling to explore whether and how the growth of Chinaʹs exports is displacing exports of other Asian countries to third markets over the period 1990–2003. Chinese exports are defined both narrowly and more broadly to include exports from Hong Kong. We investigate whether the displacement effect on Asian exports differs when exports from Hong Kong and China are combined compared to the narrow case of Chinese exports only. Aggregate and disaggregated analyses are undertaken. In the latter, we explore whether the displacement effect varies across Asian countries and in trade with different types of countries. We find evidence of a displacement effect which is more pronounced in developed markets and stronger for Hong Kong and China combined. Further it is the high income Asian exporters that experienced a greater displacement effect. We also investigate whether Chinaʹs development has generated any offsetting effects on its neighboursʹ exports to China itself and find that Chinese growth has indeed increased Chinaʹs imports from the Asian countries in the sample and in particular from Japan and Korea.