Evolution of Regional Export Growth in China: A Multidimensional Decomposition of Export Dynamics

Over the past few decades, China's exports have grown at a phenomenal pace. Using a firm-product-destination-level database from 2000 to 2016, this article analyzes the microlevel mechanisms underlying changes in the growth of China's local export from the perspective of export relationship dynamics. To identify the impact of each kind of export dynamics, we decompose export growth into three distinct aspects: entry, incumbent, and exit. We break down China's export growth along various dimensions and find that entry of new export relationships is the biggest force driving rapid export growth, but the quality of these entry relationships is far lower than the market average. We further analyze industrial restructuring and spatial restructuring of entry relationships. By estimating the correlation coefficient between the quality of the export relationship and the entry relationship, we demonstrate the need to increase the quality of entry relationships. The findings suggest that the entry relationship is pivotal to understanding the changing export geography, and it is imperative to change from traditional competition on quantity to nonquantity competition on quality upgrading.