MADE IN CHINA: A THREAT TO EUROPEAN AUTOMOTIVE INDUSTRY?

People's Republic of China has experienced an unprecedented growth of exports in the last decades. At first these exports were considered to be mainly of low added value but China's export structure has changed dramatically in the last years. China is growingly exporting high value products. Example of such goods can be motor vehicles which are also crucial for numerous Central and Eastern European countries. In this paper we will focus on how China's growing car exports influence the exports of Visegrad countries into their main export destinations. The gravity model using panel data regression will be used to assess the impact of China's rise on economies of Slovakia, Czech Republic, Hungary and Poland. It is showed that despite the growing Chinese exports in the vehicle sector, a decline of Visegrad countries exports due to Chinese competition is not straightforward. One of the plausible explanations is that Chinese cars are not outright substitutes to cars produced in the European Union. This paper is organized as follows: The first part briefly presents the main changes in the Chinese car exports and summarizes the literature review. The following part focuses on the methodology and describes gravity approach and data used in our analysis. The main findings are presented in the next part and conclusion and discussion of our results is offered at the end of the paper.