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Moving up the Quality ladder? EU-China Trade Dynamics in Clothing

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  • Hylke VANDENBUSSCHE

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES )and Center for Operations Research and Econometrics (CORE), CEPR &KULeuven, LICOS)

  • Francesco DI COMITE

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and EU Commission)

  • Laura ROVEGNO

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Christian VIEGELAHN

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and International Labour Organization-Geneva)

Abstract

This paper compares European and Chinese exports in the clothing sector since the end of the Multi-Fiber Arrangement in 2005. Using detailed product-level data from UN Comtrade, we document the pattern of export prices and quantities observed for both countries, considering both exports to the rest of the world and to a particular destination market. We find that within narrowly defined product categories, European varieties typically sell for a higher price than Chinese varieties. But this price gap is narrowing. Despite rising prices, Chinese varieties are increasingly selling more than European varieties, suggesting that quality differences are narrowing. While European “core” products in clothing are stable over time, Chinese exports show strong product dynamics with exit and entry of new “core” products every year and “core” products changing rapidly. Both China and the EU export in every product category, resulting in a perfect product overlap with no products being exported by only one of the two. To make sure that our findings are not driven by a different product mix or a different destination country mix of EU versus Chinese exports, we compare EU and Chinese exports of clothing to the US and limit the comparison to HS6 product categories that are exported by both countries to the US. Again we obtain similar results as those obtained by comparing EU and Chinese exports to the rest of the world. Also, our evidence is suggestive of China exporting its high quality goods, while the EU exporting its most efficiently produced goods.

Suggested Citation

  • Hylke VANDENBUSSCHE & Francesco DI COMITE & Laura ROVEGNO & Christian VIEGELAHN, 2011. "Moving up the Quality ladder? EU-China Trade Dynamics in Clothing," LIDAM Discussion Papers IRES 2011047, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2011047
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    References listed on IDEAS

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    1. Francesco Di Comite & Jacques-François Thisse & Hylke Vandenbussche, 2011. "Verti-zontal Differentiation in Monopolistic Competition," Development Working Papers 322, Centro Studi Luca d'Agliano, University of Milano, revised 17 Oct 2011.
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    Cited by:

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    2. Giorgia Giovannetti & Marco Sanfilippo, 2016. "China’s competition and the export price strategies of developed countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(2), pages 238-254, March.
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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