ORIGINAL PAPERChinas fare share? The growth of Chinese exportsin world tradeSteven HustedShuichiro NishiokaPublished online: 6 February 2013? Kiel Institute 2013AbstractThe growth of Chinese exports in market share over the past two dec-ades is a singular event in the history of world trade. Using data from 19952010,we document this growth in a variety of ways. We show that the expanded trade ispervasive. Virtually every country in the world has seen China claim a larger shareof its import market. Then, we use Constant Market Share analysis to determinewhich country or countries have lost market share as Chinas trade has grown.Contrary to much discussion in the popular press, we find strong evidence that otherdeveloping countries have not seen export shares fall as a result of Chinas gains.Rather, our results suggest that Chinas share growth has come largely at theexpense of exporters based in developed countries, especially Japan and the UnitedStates.KeywordsChinese exports ? Constant market share analysis ? Export sharesJEL ClassificationF14 ? P331 IntroductionOver the past two decades the Chinese economy has grown at a remarkable pace.Between 1995 and 2007 Chinese real GDP grew at an average annual rate of moreS. Husted (&)Department of Economics, University of Pittsburgh,4508 WW Posvar Hall, Pittsburgh, PA 15216, USAe-mail: husted1pitt.eduS. NishiokaDepartment of Economics, West Virginia University,1601 University Avenue, Morgantown, WV 26506-6025, USAe-mail: Shuichiro.Nishiokamail.wvu.edu123Rev World Econ (2013) 149:565585DOI 10.1007/s10290-013-0149-2than 10 %. Per capita real GDP rose by 250 % over this period.1One of the leadingfactors driving this economic growth has been the extraordinary performance ofChinese exports. According to the World Trade Organization (WTO), in 2010 Chinaranked first in exports to the world market with merchandise export sales of morethan $1.5 trillion and a world market share of 10.4 %. In 1998, China had less than2 % of the world market. Twenty years earlier, Chinas share was essentially zero.As Chinas share of world exports has grown, it has come under increasing pressureto allow its currency to appreciate; often the criticism of its exchange rate practicesincludes charges that other developing and emerging market economies have bornethe brunt in terms of lost export markets.2The purpose of this paper is to provide an analysis of Chinese export growth overthe period when its share of world exports rose most rapidly, the years 19952010.We provide detail on the commodity composition of Chinese exports and how thiscomposition has changed. We also discuss some aspects of the geographic patternand commodity composition of Chinese trade. In addition, a fundamentalcontribution of this paper is that we provide considerable evidence that theprincipal exporting countries that have lost market share to China are developedcountries, especially Japan and the United States.We use Constant Market Share (CMS) analysis (i.e., Fagerberg and Sollie 1987)to determine which of five factors (i.e., market share, commodity composition,commodity adaptation, market composition, and market adaptation) are responsiblefor the rise of Chinese share. During the period we consider, the market share effectis the critical factor to explain the share change in the world trade. This element oftrade growth captures the extent to which an exporter gains or loses market shareagainst other exporters independent of changes in the product and destinationpattern of world imports. In particular, almost all share gains of China over theperiod 19952010 (i.e., the market share effect accounts for 11.6 of 12.9 percentagepoints (pp.) of Chinese share gains) stem from the market share effects.3We also apply CMS analysis to the sub-periods of 19952000, 20002005, and20052010.Intheperiodof19952000,thesharegainofChinawasrelativelymoderate(2.9 pp.) and Japan and Germany lost market share in roughly equal amounts (2.4 and2.2 pp., respectively). The United States also saw its world export market share riseduringthisperiod,dueprimarilytothecommoditycompositioneffect.Thatis,theUnitedStatesgainedmarketsharebecausethestructureofworldimportdemandchangedtowardthetypesofgoodsthattheUnitedStatesexports.Duringtheperiod20002005,Chinesemarket share increased by 5.8 pp. and the majority of Chinese share gains wereaccompaniedbythesignificantmarketsharelossoftheUnitedStates(-4.0 pp.).Finally,over the sub-period (20052010) that included the great trade collapse of 20082009,1These numbers use China Version 2 data from the PWT6.3 data set. See What is New in PWT 6.3?link on the Penn World Tables site, http:/pwt.econ.upenn.edu/php_site/pwt_index.php, for a discussionof the differences between this version of Chinese data and official Chinese data.2See, for instance, Arvin Subramanian, Who Pays for the Weak Renminbi?, 11 February 2010, VoxFront Page, http:/www.voxeu.org/index.php?q=node/4604.3With the exception of Sect. 2, the discussion of sha