The Chinese Export Displacement Effect Revisited: The Case of the East African Community

Abstract

China's increasing exports have prompted research to examine whether Chinese exports displace those that originate from elsewhere. In this paper we focus on the growth of China's exports to the East African Community (EAC) countries and show how they have affected exports from the European Union (EU). Our methodological contribution to the literature is a set of total and relative displacement estimates based on different specifications of the gravity model where we control for country–year fixed effects so as to avoid the error of not accounting for time-varying “multilateral resistance.” Our empirical findings do not support the hypothesis that Chinese exports have displaced exports from other countries including those from the EU. These results suggest that competition in the EAC market has not been a zero-sum game among different exporting countries.