EU-China Trade and intra-EU Trade: Substitute or Complementary?

Huiyao Chen, Changyuan Luo, Mary-Françoise Renard () and Shiyi Sun
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Huiyao Chen: The Wharton School - University of Pennsylvania
Mary-Françoise Renard: CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne

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Abstract: This paper examines how EU-China trade affected intra-EU trade. The estimation shows that when a country's share of trade with China increased, its share of trade with EU partners declined. This suggests that stronger trade links with China resulted in weaker trade links among EU countries. Furthermore, the "disintegration" effect of the export to China was stronger than that of import from China, meaning that the influence of China as an export destination was greater than that of China as a source of import. An extended analysis shows that the disintegration effect was most strongly felt in trade links among EU core countries, less strongly felt in trade links between EU core and periphery countries, and least strongly felt in trade links among EU periphery countries. In comparison, we find that EU import from the US and India significantly weakened and strengthened intra-EU trade respectively. Estimation results using product level data demonstrate that the effects depend on the types of products we are concerned with. Whether using gross value or value added, the conclusions remain valid.

Keywords: EU-China trade; intra-EU trade; substitute; complementary (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cna, nep-eec and nep-int
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