A Race to Lead: How Chinese Government Interventions Shape U.S.-China Production Competition

70 Pages Posted: 15 Apr 2020 Last revised: 15 Mar 2022

See all articles by Xiao Cen

Xiao Cen

Mays Business School, Texas A&M University

Vyacheslav Fos

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

Wei Jiang

Columbia University - Columbia Business School, Finance; ECGI; NBER

Date Written: March 14, 2022

Abstract

Integrating establishment-level data from the United States and China, we study dynamic industrial interdependence between the two economies. Births of Chinese firms predict same-industry firm exits and reduced employment in the U.S., but the reverse relationship is not significant. Chinese Five-Year Plans were not preceded by low production/employment in the same industries in the U.S. but were followed by shrinkage with spillovers along the supply chain. Stock returns, firm valuation, and job postings indicate that neither the market nor companies expected deterioration in the targeted industries prior to the announcement of the Plans, but made adjustments afterwards.

Keywords: Investment policy, employment, subsidies, industrial policy

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 U.S.-China Production Competition (March 14, 2022). Available at SSRN: https://ssrn.com/abstract=3564494 or http://dx.doi.org/10.2139/ssrn.3564494

Xiao Cen (Contact Author)

Mays Business School, Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4218
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 University - Columbia Business School, Finance ( 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

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