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Do Chinese and Korean products compete in the Japanese market? An investigation of machinery exports

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  • Baak, SaangJoon

Abstract

The purpose of this paper is to examine whether and to what extent Chinese and Korean products in the machinery industry compete with each other in the Japanese market. Empirical tests of panel data of 16 machinery products from 2000Q1 to 2012Q2 show that a decrease in the unit prices of Chinese exports leads to a decrease in the demand for Korean exports. In contrast, a decrease in the unit prices of Korean exports does not lead to a decrease in the demand for Chinese exports. In addition, lagged Chinese prices have bigger impacts on current Korean prices than lagged Korean prices on current Chinese prices. Simulation experiments investigating the impacts of a change in exchange rates on the Chinese and Korean export volumes also confirm that the Korean variables do not affect the Chinese export volume as much as the Chinese variables affect the Korean export volume. Overall, the findings in the present paper indicate that China has already emerged as a formidable competitor to Korea in the Japanese machinery market.

Suggested Citation

  • Baak, SaangJoon, 2014. "Do Chinese and Korean products compete in the Japanese market? An investigation of machinery exports," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 256-271.
    • Handle: RePEc:eee:jjieco:v:34:y:2014:i:c:p:256-271
    DOI: 10.1016/j.jjie.2014.09.002
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    Cited by:

    1. Willem THORBECKE, 2016. "Understanding the Flow of Electronic Parts and Components in East Asia," Discussion papers 16072, Research Institute of Economy, Trade and Industry (RIETI).
    2. Gilberto Libanio & Diana Chaib, 2021. "The competition between China and Korea for export markets in Latin America: an analysis by technological categories," Textos para Discussão Cedeplar-UFMG 632, Cedeplar, Universidade Federal de Minas Gerais.
    3. Thorbecke, Willem, 2017. "How Would a Slowdown in the People’s Republic of China Affect its Trading Partners?," ADBI Working Papers 634, Asian Development Bank Institute.
    4. Thorbecke, Willem, 2019. "Why Japan lost its comparative advantage in producing electronic parts and components," Journal of the Japanese and International Economies, Elsevier, vol. 54(C).
    5. Willem Thorbecke, 2015. "Understanding Japan's Capital Goods Exports," The Japanese Economic Review, Japanese Economic Association, vol. 66(4), pages 536-549, December.
    6. Jihyun Eum, 2019. "Impact of Chinese Renminbi on Korean Exports: Does Quality Matter?," Working Papers 2019-24, Economic Research Institute, Bank of Korea.
    7. Yan Liu & Xunpeng Shi & James Laurenceson, 2018. "Are China's Exports Crowding Out or Being Crowded Out? Evidence from Japan's Imports," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(4), pages 1-23, July.
    8. Baak, SaangJoon, 2017. "Is the yen misaligned more during the Abenomics period?," Japan and the World Economy, Elsevier, vol. 44(C), pages 26-34.
    9. Thorbecke, Willem, 2018. "Investigating ASEAN’s electronic and labor-Intensive exports," Journal of Asian Economics, Elsevier, vol. 55(C), pages 58-70.
    10. Willem Thorbecke, 2021. "The Exposure of French and South Korean Firm Stock Returns to Exchange Rates and the COVID-19 Pandemic," JRFM, MDPI, vol. 14(4), pages 1-29, April.
    11. Thorbecke, Willem, 2017. "Investigating Imbalances in Manufacturing Trade," RIEI Working Papers 2017-07, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.

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    More about this item

    Keywords

    Panel data; Simultaneous equations; Cross-price elasticity; Chinese exports; Korean exports;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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