Congested Export Spillover in China

This paper uses Chinese firm-level data to investigate the possible nonlinear spillover caused by export congestion. We argue that there could exist an inverted-U curve in terms of export spillover effect, resulting from the fact that once exporters become over-agglomerated, export congestion is likely to cause negative export spillover. The estimation results support the hypothesis of an inverted-U curve of export spillover effect. Further calculation shows that the degree of Chinese exporters' congestion approximately ranges around 17-34% and demonstrates an increasing trend over time. The finding suggests that policies aimed at reducing export congestion such as industrial upgrading, improvement of firms' efficiency and the current shift from export dependence towards domestic demand would be important for a more healthy development of China's exports in the future.