Impacts of Increased Chinese Imports on Japan's Labor Market: Firm and regional aspects

Using firm/plant-level data from the Census of Manufacture, this study investigates the impact of Chinese import competition, focusing on different effects based on firm characteristics and regional factors. We find that import competition from China harms Japanese firms’ survival ratios, with the negative impacts being especially strong for smaller firms. Subcontractors are also more vulnerable to Chinese import competition. However, subcontractors in metropolitan areas experience lesser negative impact. In terms of the effects on firm employment, import competition from China had a negative impact, but no statistically significant difference exists based on firm size or whether firms are subcontractors. Firms with overseas affiliates in China or multiple domestic plants reduced their employment in Japan. Moreover, plants in Tokyo, Aichi, and Osaka areas have been particularly inflicted an adverse effect.