China's Crowding Out Effect on East Asian Exports: Gross Value and Domestic Value-Added Analysis

This paper aims to revisit the debate about China's crowding out effect on other East Asian exporters using both gross value and domestic value-added export data. The results show that in gross value terms, the crowding out effect is evident in most product categories, and particularly strong in the textile, leather and footwear. In value-added terms, the analysis did not find evidence of the crowding out effect on other East Asian exporters. The results suggest that (i) while China's exports compete fiercely with other East Asian countries’ exports, this competition does not necessarily worsen the competitors’ economic welfare; and (ii) there are new opportunities for East Asian developing countries to join the regional production network, rather than merely filling in the product categories left vacant by the more developed countries as suggested by the flying geese pattern.