Sino-EU15 Export Competition in Central and Eastern Europe: Is China Crowding Out Exports from the EU15?

ABSTRACT

This paper aims, through the use of a gravity model and the disaggregated trade data over the period 2006–2017, to investigate whether China’s growing exports to Central and Eastern European countries, crowd out exports from the EU15. The analysis shows the intensification of the Sino-EU15 export competition, especially in sectors of electronics, machinery, and textiles and furniture. The econometric analysis shows a positive correlation between China’s exports and exports from the EU15 when observing total trade, as well as in sectors of machinery and electronics. By contrast, crowding out is detected in the sector of textile and furniture.

KEYWORDS:

• Crowding-out effect
• Sino-EU15 export competition
• gravity model
• the 16+1 cooperation
• Eastern Europe

JEL CLASSIFICATION:

• F14
• O52

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Montenegro, North Macedonia, Poland, Romania, Serbia, Slovakia, and Slovenia.

2. Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg Netherland, Portugal, Spain, Sweden, and United Kingdom.

3. Countries which joined EU after 2004, i.e. Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, and Slovenia.

4. For example, if Confucius Institute was established in a country j in 2005, the instrumental variable takes value 1 in 2005, value 2 in 2006,….value 10 in 2014. If an additional Confucius Institute was established in 2015, the variable takes value 12 in 2015, value 14 in 2016, value 16 in 2017. The same logic applies for higher numbers of Confucius Institutes.

5. France, Germany, Italy, and Spain.