China Shock on Japanese Firms: Firms' differential reactions to the increase in Chinese imports

Author Name ITO Tadashi (Gakushuin University) / MATSUURA Toshiyuki (Keio University)
Creation Date/NO. April 2022 22-E-036
Research Project Globalization and the Japanese Economy: Firm Adjustment and Global Trade Governance
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This study investigates the impact of import competition from China, using the firm/establishment level data from the Census of Manufacturer with a particular focus on firms’ choice of multiple reactions. We find that product switching is an important reaction for firms facing increasingly harsh competition with imports from China. Firms tend to choose, first, employment adjustment only, and then with stronger import competition, product switching only, and finally, both of employment adjustment and product switching as import competition from China increases.