TIPS Export

Report
IS CHINA CROWDING OUT SOUTH
AFRICAN EXPORTS TO SUBSAHARAN AFRICA?
Lawrence Edwards (UCT)
Rhys Jenkins (UEA)
GROWING INVOLVEMENT OF CHINA IN
SUB-SAHARAN AFRICA
• Trade links - total trade between China & SSA
increased from US$7.5 bn. to US$113 bn.
(2001-2011)
• Chinese FDI in Africa – US$13 bn. In 2010
• Chinese technical cooperation
• Most of the discussion has related to the role
of China in oil, mining and infrastructure
projects; less attention to manufacturing.
CHINA, SOUTH AFRICA AND SSA
• Chinese exports to SSA increased 13-fold
2001-2011 (mainly manufactures).
• Some studies looking at impacts on domestic
market in destination countries.
• None looking in detail at implications for
South African exports to these markets.
• SSA an important market - 22% of total SA
exports of manufactures
RESEARCH QUESTIONS
• Are China and South Africa competing with each
other in SSA markets, how extensive is such
competition and how is this changing over time?
• To what extent has Chinese competition led to
the displacement of South African exports?
• In which countries have South African exports
been most affected?
• Which South African export sectors face the
greatest threat from Chinese competition?
DATA
Reporter
countries
South Africa, Australia, Canada, Germany,
Spain, France, UK, Italy, Netherlands, USA,
South Korea, ASEAN 5(Singapore, Malaysia,
Indonesia, Thailand, Philippines), Hong
Kong, India, China
African
partner
country
Zambia, Zimbabwe, Mozambique, DRC,
Nigeria, Angola, Kenya, Tanzania, Malawi,
Ghana
Time
Annual from 1997 to 2010
Product
HS6. Rev 96
Source:
UN Comtrade
SHARES OF SA AND CHINA IN MANUFACTURED
IMPORTS OF 10 SSA COUNTRIES
SA SHARE OF MANUFACTURED
IMPORTS BY COUNTRY
SA Share of Imports
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
1997
Angola
1998
DRC
1999
Ghana
2000
Kenya
2001
2002
Malawi
2003
2004
Mozambique
2005
Nigeria
2006
2007
Tanzania
2008
Zimbabwe
2009
2010
Zambia
CHINA SHARE OF MANUFACTURED
IMPORTS BY COUNTRY
China Share of Imports
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
1997
Angola
1998
DRC
1999
Ghana
2000
Kenya
2001
2002
Malawi
2003
2004
Mozambique
2005
Nigeria
2006
2007
Tanzania
2008
Zimbabwe
2009
2010
Zambia
GROWTH AT THE INTENSIVE AND
EXTENSIVE MARGINS, 1997-2010
South
Africa
China
Others
Intensive
76.4
46.3
48.3
Extensive
23.6
53.7
51.7
Exit
-1.8
-0.7
-7.8
Entry
25.4
54.4
59.5
9.4
23.4
10.6
Average log growth rate
GROWING OVERLAP OF SA AND CHINA
EXPORTS
INDEX OF COMPETITIVE THREAT FROM
CHINA FOR SA EXPORTS
POTENTIAL IMPACTS OF CHINA ON SA
EXPORTS
• Most studies of impact of China on other
countries’ exports focus on products which both
countries export (intensive-intensive margin).
• But over half of growth of Chinese exports to SSA
have come through entry into new products
(extensive margin).
• Important to look at both intensive and extensive
growth by China and to see how these affect
South African growth at both intensive and
extensive margins.
GRAVITY MODEL
• Estimating equation derived from a gravity-type trade
model.
VX ijkt    2 DSAi VXCchina, jkt   ijkt
where  ijkt   jkt  ikt  ijk  ijkt .
and i is the exporter, j is the importer, k is the product and t is
the year, and DSA is a South African dummy variable.
A positive sign for 2 indicates the Chinese exports affect
South African exports positively relative to alternative export
suppliers.
IMPACT OF CHINESE EXPORTS ON SA
EXPORTS (MARGINAL EFFECTS)
China
Extensive
SA
Intensive
All
HT
MT
LT
RB
All
HT
MT
LT
RB
Fixed Effects
Reporter x hs4 x time
Partner x hs4 x time
Reporter x partner (pair) x hs4
Extensive
-0.007**
-0.016*
-0.014**
-0.016**
0.011*
0.035+
0.024
0.066*
0.040
-0.008
Intensive
-0.013**
-0.009**
-0.016**
-0.012**
-0.013**
-0.053**
-0.035**
-0.063**
-0.048**
-0.059**
Y
Y
Y
Y
Y
Y
** p<0.01, * p<0.05, + p<0.1
SUMMARY OF RESULTS
• South Africa is less likely (relative to other exporters) to
export a product to a market where China already exports
or enters (extensive-extensive margin). However, this effect
is felt at the margin with only a minor impact on the value
of SA trade flows.
• In product-market combinations that overlap for China and
South Africa, Chinese export growth negatively affects
South Africa’s exports relative to other countries (intensiveintensive margin).
• Chinese export growth in particular product-market
combination reduces probability that SA exports in the
same product-market combination (relative to other
countries) (Intensive-extensive margin), but the overall
impact on the value of SA exports is low.
IMPACT ON SA EXPORTS
• Seen that there competition between Chinese
and SA exports to SSA has increased significantly
over time.
• Some evidence that Chinese exports have
negative impacts on SA exports of the same
product.
• Now try to quantify the size of this impact.
• Two approaches:
• Simulation using the coefficients from the econometrics
• Decomposition using extension of CMS analysis
CROWDING OUT OF SA EXPORTS,
1997-2010
CROWDING OUT OF SA EXPORTS BY
COUNTRY, 1997-2010
Total
Angola
Ghana
Kenya
Mozambique
Malawi
Nigeria
Tanzania
DRC
Zambia
Zimbabwe
‘crowded-out’
exports Share 2010 Share total
(US$ mill)
value
impact
1876
20%
100%
183
28%
10%
87
25%
5%
135
20%
7%
371
22%
20%
50
12%
3%
164
28%
9%
103
19%
6%
164
20%
9%
349
21%
19%
270
14%
14%
SA LOSS OF MARKET SHARE TO CHINA,
2001-10 (DECOMPOSITION ANALYSIS)
Total
Angola
DRC
Ghana
Kenya
Malawi
Mozambique
Nigeria
Tanzania
Zambia
Zimbabwe
Loss in Loss as % Share of
US$ mn. of 2010
total for 10
Exports
countries
-919
9.9%
100%
-172
26.3%
18.7%
-73
8.8%
8.0%
-55
16.0%
6.0%
-66
9.8%
7.2%
-37
8.8%
4.0%
-176
-67
-123
-89
-60
11.5%
11.3%
22.7%
5.3%
3.0%
19.2%
7.3%
13.4%
9.7%
6.5%
IMPACTS OF CHINA ON SA EXPORTS BY
TECHNOLOGY LEVEL
Resource
Based
Low Tech
Medium
Tech
High Tech
Loss to % of SA % of
China
Exports Total
(us$mn.) 2010
Loss
-161 856
-6.4% 17.6%
-281 006
-13.0%
30.6%
-365 719
-9.3%
39.8%
-110 273
-17.5%
12.0%
SECTORS MOST AFFECTED BY CHINESE
COMPETITION
• In absolute terms
•
•
•
•
Electrical and electronic equipment
Boilers and machinery
Iron and steel and products of iron and steel
Vehicles
• In relative terms
• Textile and apparel
Partly reflects low level of exports (at end of period)
CONCLUSIONS
• Limited competition between SA and China in late 1990s.
• Increasing competition post-WTO accession – result of
Chinese expansion at both extensive and intensive margins.
• SA exports to SSA markets 10-20% lower in 2010 compared
to counterfactuals.
• Up to now impact on SA exports has been less pronounced
in neighbouring markets (Zimbabwe, Malawi and possibly
Zambia).
• Although SA exports have declined in relative terms and
this is partly attributable to crowding out by Chinese
products, this has not meant a decline in the value of SA
exports to these markets.

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