The rise of China and East Asian export performance

Ever since China began to emerge as a major trading nation in the late 1970s, there has been a growing concern in policy circles in East Asian countries that competition from China could crowd-out their export opportunities. Initially, the ‘China fear’ was mainly related to export competition in standard labourintensive manufactured goods (clothing, footwear, sports goods), but soon it turned out to be pervasive as China began to rapidly integrate into global production networks in electrical and electronics products through an unprecedented increase in foreign direct investment (FDI) in these industries. Rapid increase in China’s world export share in these product lines, coupled with some anecdotal evidence of multinational enterprises (MNEs) operating in other countries in the region relocating to China, has led to concern that China is posing a serious threat to export performance not only of lowincome countries but also of newly industrialized economies (NIEs), Japan and other advanced industrialized nations.