A Race to Lead: How Chinese Government Interventions Shape the Sino-US Production Competition

43 Pages Posted: 15 Apr 2020

See all articles by Xiao Cen

Xiao Cen

Columbia University - Columbia Business School

Vyacheslav Fos

Boston College - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Wei Jiang

Columbia Business School - Finance and Economics; ECGI; NBER

Date Written: March 30, 2020

Abstract

Using U.S. and China establishment-level data, this paper studies the dynamic interdependence in industrial activities between the U.S. and China. In a VAR framework, high birth rates of Chinese firms predict same-industry firm exits and lowered employment in the U.S., particularly in the export-intensive industries. Moreover, high industry subsidy from the Chinese government is followed by a decrease in the number of establishments and employment in the corresponding U.S. industries, although these subsidies are not motivated by existent deterioration in investment opportunities in the targeted industries in the developed world. China's Five-year Plans offer a tight causal inference as shocks to China's industry growth. These shocks were not preceded by low productivity or valuation in the same industries in the U.S. but were followed by shrinkage of establishments and employment in these industries.

Keywords: Production Competition, Industrial Policy, Trade War

JEL Classification: F14, F16, O25, L60

Suggested Citation

Cen, Xiao and Fos, Vyacheslav and Jiang, Wei, A Race to Lead: How Chinese Government Interventions Shape the Sino-US Production Competition (March 30, 2020). Available at SSRN: https://ssrn.com/abstract=3564494 or http://dx.doi.org/10.2139/ssrn.3564494

Xiao Cen (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Vyacheslav Fos

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Wei Jiang

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States
(212) 854-5553 (Phone)

ECGI ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
54
Abstract Views
295
rank
411,993
PlumX Metrics