Dominance on World Markets: the China Conundrum

Sébastien Jean (), Ariell Reshef (), Gianluca Santoni () and Vincent Vicard ()
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Sébastien Jean: LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - Cnam - Conservatoire National des Arts et Métiers [Cnam]
Ariell Reshef: CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique
Gianluca Santoni: CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique
Vincent Vicard: CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique

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Abstract: We characterize China's atypical dominance in world trade at the product level and analyze a number of factors that could explain it. Defining product-level dominant positions as a share of more than 50% of worldwide exports, we show that China held a dominant position in almost 600 products out of some 5,000 in 2019. This is at least six times greater than the equivalent number for the United States, Japan or any other country, and twice the number for the European Union considered as a whole. This large number of dominant positions held by China is atypical by historical standards, at least since the 1970s. While we do not identify definite causes of China's numerous dominant positions, we can rule out some explanations. The number of dominant positions is not explained by Chinese global market share alone. Nor is it explained by China's sector specialization; dominant positions are prevalent in several important sectors (electronics, textiles/wearing apparel, footwear and machinery). Looking at pricing behavior, a fine-grained analysis based on individual firms' average market share suggests that Chinese firms use their market power to charge significant mark-ups, much more than French exporters. Such product-level dominant positions make it difficult for importers to substitute their supplier for another, at least in the short term. This may be consequential in an open world increasingly seen through the lens of dependencies.

Keywords: International trade; China; Dominance (search for similar items in EconPapers)
Date: 2023-12
Note: View the original document on HAL open archive server: https://cnam.hal.science/hal-05071200v1
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Published in CEPII. 2023

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