An Anatomy of China’s Export Growth

We decompose China’s phenomenal export growth since 1992 along various dimen-sions. Disaggregated data on China’s exports reveal that the export structure changed dramatically, with China moving out of agriculture and apparel and into electron-ics and machinery. Despite the shift into these more sophisticated products, China’s manufacturing exports did not become more skill intensive when processing trade is excluded. This is a result of the nature of processing trade in China, much of which involves China’s assembly of high value imported inputs into final goods. Trade growth was accompanied by increasing specialization and was mainly due to expanded exports of existing products, as opposed to export discoveries. Using highly disaggregated U.S. trade data at the HS 10-digit level, only 10 to 20 percent of China’s export growth resulted from exporting new products; almost all of China’s export growth to the U.S. was in existing goods, or the so-called intensive margin. The large increase in exports pushed down China’s export prices, though declines were limited in sectors where new varieties were developed