The China Shock in World Markets: Chinese Competition and German Exporters

Philip Bodenschatz, Peter Egger and Arne Nagengast

No 21949, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: China’s export expansion increasingly challenges advanced-economy exporters in third markets. Using confidential German exporter data, we generalize the canonical China-shock instrument to multiple destinations, exploiting Chinese gains in products across similar markets. Within firms, export growth falls in destination-product markets where Chinese market shares rise, through weaker growth among continuing relationships and market exit. Growth in estimated quality and unit values also declines, while stronger quality, price, product, and destination advantages cushion losses. Market exit and weaker entry account for more than half of aggregate adjustment. Structural-gravity evidence attributes China’s gains mainly to quantity expansion and rising exporter-product competitiveness.

Keywords: China shock; export competition; German exporters; China-shock instrument (search for similar items in EconPapers)
JEL-codes: C26 F12 F14 L25 (search for similar items in EconPapers)
Date: 2026-09
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