Page 26 - THE SOUTH CHINA BUSINESS JOURNAL
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MMUNITY NEWS
Race to Lead:
How China’s Government
Interventions Shape U.S.-
China Industrial Competition
By the Stanford Center on China’s Economy and Institutions (SCCEI)
INSIGHTS China has become a serious competitor in economic
sectors previously dominated by U.S. industry. In
•Between 1998 recent years, trade conflicts between the two countries
and 2020, a rise in have become more common, especially given the view
China’s firm births is that China’s government intervenes a great deal to help
correlated with higher domestic firms compete. New research explores to
firm exits and slower what extent industries targeted and subsidized through
growth one and two China’s Five-Year Plans (FYPs) have displaced U.S. firms
years later for U.S. up and down the value chain.
firms in corresponding
sectors. The data. Researchers collected data on 1,643,000
U.S. firms and 1,100,000 Chinese firms from the U.S.
•Sectors targeted and Census Longitudinal Business Database (LBD) and
subsidized through the China Industrial Enterprises Database (CIED).
China’s Five-Year Plans Both databases capture firm-level characteristics and
experience a surge in changes in economic activities over time, including
new firms, while the firm births and deaths, employment, sales, exports,
corresponding sectors total assets, and others. China’s CIED database also
in the U.S. see declines includes data on the amount of state subsidies firms
in firm births, output, receive. Researchers then organized the merged data
employment and from both countries according to industry sector
earnings. and identified those sectors that China’s government
targeted for development in each of its FYPs from 2001,
•China’s earlier Five- 2006, 2011, and 2016. Researchers supplemented this
Year Plans tend database with job posting data from 1.28 million U.S.
to displace labor- firms between 2007 and 2020 from Burning Glass.
intensive sectors in
the U.S., while more China’s firms displace same-sector U.S. firms. To
recent ones displace examine the relationship between trends in industrial
capital-intensive activity in China and the U.S., researchers compared
sectors in the U.S. the rates of firm births, firm exits, and employment
by sector in the U.S. and China between 1998 and
2020. They found that a rise in China’s firm births is
correlated with higher firm exits and slower growth
one and two years later for U.S. firms in corresponding
sectors. Further, they found that a 1% rise in
employment in China’s firms predicts a 0.1% decline in
employment in the corresponding U.S. sector.
When disaggregating by firm ownership type,
researchers found that this displacement dynamic
appears driven by China’s private firms rather than
by state-owned enterprises. China’s private firms
23 AMCHAM SOUTH CHINA
Race to Lead:
How China’s Government
Interventions Shape U.S.-
China Industrial Competition
By the Stanford Center on China’s Economy and Institutions (SCCEI)
INSIGHTS China has become a serious competitor in economic
sectors previously dominated by U.S. industry. In
•Between 1998 recent years, trade conflicts between the two countries
and 2020, a rise in have become more common, especially given the view
China’s firm births is that China’s government intervenes a great deal to help
correlated with higher domestic firms compete. New research explores to
firm exits and slower what extent industries targeted and subsidized through
growth one and two China’s Five-Year Plans (FYPs) have displaced U.S. firms
years later for U.S. up and down the value chain.
firms in corresponding
sectors. The data. Researchers collected data on 1,643,000
U.S. firms and 1,100,000 Chinese firms from the U.S.
•Sectors targeted and Census Longitudinal Business Database (LBD) and
subsidized through the China Industrial Enterprises Database (CIED).
China’s Five-Year Plans Both databases capture firm-level characteristics and
experience a surge in changes in economic activities over time, including
new firms, while the firm births and deaths, employment, sales, exports,
corresponding sectors total assets, and others. China’s CIED database also
in the U.S. see declines includes data on the amount of state subsidies firms
in firm births, output, receive. Researchers then organized the merged data
employment and from both countries according to industry sector
earnings. and identified those sectors that China’s government
targeted for development in each of its FYPs from 2001,
•China’s earlier Five- 2006, 2011, and 2016. Researchers supplemented this
Year Plans tend database with job posting data from 1.28 million U.S.
to displace labor- firms between 2007 and 2020 from Burning Glass.
intensive sectors in
the U.S., while more China’s firms displace same-sector U.S. firms. To
recent ones displace examine the relationship between trends in industrial
capital-intensive activity in China and the U.S., researchers compared
sectors in the U.S. the rates of firm births, firm exits, and employment
by sector in the U.S. and China between 1998 and
2020. They found that a rise in China’s firm births is
correlated with higher firm exits and slower growth
one and two years later for U.S. firms in corresponding
sectors. Further, they found that a 1% rise in
employment in China’s firms predicts a 0.1% decline in
employment in the corresponding U.S. sector.
When disaggregating by firm ownership type,
researchers found that this displacement dynamic
appears driven by China’s private firms rather than
by state-owned enterprises. China’s private firms
23 AMCHAM SOUTH CHINA
