Competition among China and ASEAN-5 in the US Market: A New Extension to Shift-Share Analysis

The United States has a robust trade and investment relationship with China and the Association of Southeast Asian Nations (ASEAN). ASEAN is collectively the fourth-largest trading partner, and China is one of the largest trade partners of the United States, the largest export destination for China. Thus, China and ASEAN countries are competing in the US market intensively. The purpose of this paper is to calculate the net gains or losses for the ASEAN-5 Members and China during 1993 and 2007 in the US market. There are two main contributions of this paper: one is to dynamically estimate the net shifts of the economies as compared to the traditional comparative static approach; the other is to extend the shift‐share analysis to attribute the net gains or losses to competing exporters. This study adopts the widely used shift-share analysis technique to exam the net gains or losses for the ASEAN-5 and China during 1993-2007 in the Unites Sates market. The paper provides a new extension to the shift‐share analysis to attribute the net shift to competing economies with a dynamic approach. The paper applies the methodology to the competition among China and ASEAN-5 in the US import market with the data drawn from World Integrated Trade Solution (WITS), a data consultation and extraction software developed by the World Bank. The discussion focuses on three periods: 1993-1997, 1998-2002 and 2003-2007. In general, China performs the best among the competing economies. Among the ASEAN-5 Indonesia, Malaysia and Thailand perform better than the other two members. During the first period, all economies have positive export growth as the actual export growth shows. However, in terms of net shift, only China and the Philippines are the winners with positive value of net shifts. During the second period, China stands out while the ASEAN economies show negative net shifts values. Similar is the case for the third period. In terms of the industries, China focuses on different industries during the thee periods, and the ASEAN economies depend heavily on a few industries. China’s gains in these industries are much bigger than the ASEAN economies’ gains in value. The ASEAN economies gain in small numbers of industries with small values. When attributed the gains or losses to competing economies, China only loses to the Philippines during 1993-1997, and gains from all competing economies during all periods. Though net losers, the ASEAN-5 also gain from other competing economies. For example, Indonesia gains from Singapore and Thailand during 1993-1997, from the Philippines and Singapore during 1998-2002, from Malaysia, the Philippines and Singapore during 2003-2007. The trade war between the United States and China provides opportunity for the ASEAN countries in the Unites Sates market, however, there are negative impacts on the ASEAN countries as well. The ASEAN countries are more vulnerable. Keywords: shift-share analysis, export competitiveness, Asia, ASEAN, China.