China-SUA relationship

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Japanese and US Trade with China:A Comparative Analysis

K. C. Fung and Hitomi Iizaka*

Abstract

The paper provides a simple comparative analysis of Japanese and US trade with China. In recent years,Japanese exports to China had been growing faster than US exports, but Japanese imports from China hadbeen growing more slowly. A large amount of US and Japanese exports were first shipped to Hong Kong,and then re-exported to China. In 1994, Japans largest export item to China was general machinery, whileUS largest export item to China was transportation equipment. According to the rivalry index constructedin the paper, competition in 1994 between US and Japanese firms was most intense in the chemical goods

sector.

1. Introduction

In this paper, we examine the economic relationship between the USA and Japan inthe vast and growing market of China. China is important to both the USA and Japanbecause China has the most dynamic economy in the world today. Despite periods ofinflations and contractions, real GDP in China has grown at almost 10% annually forthe period 197992. For the provinces by Chinas coast, from Guangdong throughFujian, Jiangsu, Zheejiang to Shandong up north, the annual growth rate has on

average been over 12% for the same period. Based on calculations using purchasingpower parity exchange rates, the IMF (1993) estimated that Chinas GDP is alreadythe third largest in the world, behind only the USA and Japan.This dramatic economicperformance makes China an exciting market for American and Japanese businesses.1

To the USA, the Chinese market is one that is seen as critical. The Clinton Admin-istration views its trade policy as part of an overall economic strategy to create andmaintain high-tech jobs and to improve the standard of living of American workers(Council of Economic Advisers, 1994). Aircraft manufacturing, a high-tech, high-skill, and high-wage industry, is a leading American export item to China. At thesame time, Japan has also increasingly eyed the rising importance of China. Owing to

the bursting of the bubble economy, gyrations of the yen, and the continued and esca-lating trade conflicts with the USA, Japan would no doubt like to increase its exportsto the Chinese market.

In the next section, we examine the evolution of the Chinese trade regime. Thisserves as the historical and institutional background for our comparative analysis. Insection 3, we present information about Chinas rapidly growing trade with the rest ofthe world, focusing on Chinas import and export activities with the USA and Japan.We show that in the 1980s, Japans trade (imports and exports) with China was twiceof that of the USA But in the 1990s, the USA has become a more important tradingpartner of China because of the sharp increase of US imports from China.

Review of Development Economics, 2(2), 181190, 1998

Blackwell Publishers Ltd 1998, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA.

*Fung: University of California, Santa Cruz, CA 95064, USA. Tel: 408-459-3273, E-mail:[email protected]. Iizaka: Department of Economics, University of California, Santa Cruz, CA 95064.Tel: 408-476-6645, E-mail: [email protected] is part of a project on Chinas trade supported by theUniversity of California Pacific Rim Research Grant.


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Section 4 highlights an important feature of Chinas trade which often renders dataabout trade with China (including US and Japanese trade data) incorrect: the largevolume of goods that first go to Hong Kong and then get re-exported to China.TheseHong Kong re-exports are not reported in the US or Japans customs data as exports

to China; rather they are mostly counted as exports to Hong Kong. We provide cor-rections to the US and Japanese trade data in the section.Section 5 shows the composition of ChinaUS and ChinaJapan trade by product cat-

egories. In section 6, we utilize a simple model of US and Japanese competition in Chinato calculate an index of rivalry between Japan and the USA in the Chinese market.

2. Chinas Evolving Foreign Trade System

To provide some background for comparing US and Japanese exports, we describehere the changing foreign trade regime in China.2 Before the opening up of China in

1978, the Ministry of Foreign Trade (MOFT) controlled Chinas foreign trade system,which was run as a complete state monopoly. Trade was conducted by 15 nationalforeign trade corporations (FTCs). Each FTC monopolized the trade of some specificcommodities. International trade was an extension of domestic planning. The basicSoviet-style economic plans coordinated the flow of raw materials and intermediateproducts among major state enterprises. The production of each good was equated tothe intermediate and final demands by all industries in the economy. The plan usedimports to fill the gap between planned demand and domestic production. Exportswere used to earn foreign exchange to pay for necessary imports. Under this system,the domestic prices of tradable goods were shielded from the world market prices.

In 1979, China started to reform its foreign trade system. To decentralize, all pro-vincial governments, three municipal governments (Beijing,Tianjin, and Shanghai) andsome large state enterprises were authorized to establish their own trading com-panies. In March 1982, Chinas trade regime was further streamlined. MOFT, theImportExport Administration Commission, the Foreign Investment AdministrationCommission, and the Ministry of Foreign Economic Relations were consolidated intothe Ministry of Foreign Economic Relations and Trade (MOFERT), which then super-vised the 15 national FTCs and the local foreign trade bureaus. More recently in 1993,MOFERT had been reorganized into the Ministry of Foreign Trade and EconomicCooperation (MOFTEC), which now formulates Chinas foreign trade policies.

In 1984, the State Council decided to end the monopoly power of the national FTCsand to decrease substantially the extent of foreign trade planning. Since then, thenumber of FTCs has proliferated. In addition to the new national FTCs under thecontrol of central government ministries and other state organizations, almost everyprovincial and municipal government has its own network of FTCs conducting foreigntrade.

With decentralization, the number of FTCs increased from 15 in 1978 to more than1,000 in the mid-1980s, and to about 6,000 in the later 1980s. The new FTCs kept theirown accounts, acted independently, and no longer reported to MOFERT. There weresome unscrupulous activities and some new FTCs were unable to fulfill their contracts.

The increasing failure became a major concern. These events led to a retrenchment inmid-1988. As many as 2,000 FTCs were dissolved or merged. At the same time, theState Council reasserted control over the process of creating new FTCs.

With reforms, the scope of mandatory planning for foreign trade was also reduced.From the mid-1980s onwards the foreign trade system consisted of a combination ofmandatory planning, guidance planning, and a market mechanism. The 1984 trade

182 K. C. Fung and Hitomi Iizaka

Blackwell Publishers Ltd 1998


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reform assigned exports and imports under the mandatory plan (specified in quanti-ties) to designated national FTCs, and allowed other FTCs to pursue their activitiesboth within or outside the guidance plans. Unlike the mandatory plans, the guidanceplans were generally specified in value terms and were thus more flexible. Under the

guidance plans, FTCs could take some degree of market demand and supply intoaccount.Before 1979, the mandatory export plan covered some 3,000 items, but in 1988 it fell

to 112. By the end of the 1980s, the portion of exports under mandatory or guidanceplans accounted for about 34% of the exports. Compared with the export system, theimport system remained relatively rigid in the 1980s. In addition to import licensingand high tariffs on protected products, almost all import users were subject to a seriesof administrative measures and complicated approval procedures. But in the processof reforming the foreign trade system, the general scope of the mandatory planningfor imports was also narrowed. By 1991, no more than 40% of Chinas imports were

subject to mandatory or guidance plans. In addition, pressured by a US market Section301 access case in 1992, and the desire to join the World Trade Organization (WTO),Chinas trade regime gradually became more transparent.3

Since 1992, a large number of trade documents that were previously unavailable toforeigners have been published. A large number of tariff rates were reduced. In addi-tion, special import regulatory duties that had been instituted for 14 products in 1985were lifted. While there had been some detours, the trend in Chinas trade regime isclear: China will increasingly open itself up to foreign trade.

3. Aggregate USChina and JapanChina Trade

In the pre-reform era, China had traded relatively little with the outside world, givenits size.According to Chinas customs statistics, Chinas exports in 1994 were US$121.0billion, 12 times the volume in 1978. Chinas imports in 1994 were 10 times of those in1978. In 1990,China was the sixteenth largest exporter in the world, but by 1994 Chinasrank jumped to eleventh (WTO, 1995).

As a result of its open-door policy, Chinas volume of trade has risen substantiallyin the past 10 years. In 1994, Japan was the leading exporter to China, while the USAwas the third largest exporter.4 As is shown in Table 1, for the period 198594, trade(the sum of imports and export values) between Japan and China had almost doubled

and that between the USA and China had more than quintupled.On average, Japans trade with China was twice the volume of USChina trade in

the 1980s.During the 1990s,however,the USA became a more important trading partnerto China than Japan. This is due to the sharp increase in US imports from China. Overthe entire period considered,Japans exports to China grew more than US exports, andJapans imports from China grew less than US imports.As a result, Japans trade deficitwith China has been much lower than that of the USA with China.5 After the Tianan-men incident in 1989, both the US and Japans exports to China dropped. However,Japanese exports recovered quickly and increased 40% in 1991, whereas US exports toChina recovered more slowly and increased by only 31% in 1991.

4. The Role of Re-Exports via Hong Kong

The above description of aggregate trade of the USA and Japan with China is,however,misleading. As China decentralized its economy, Hong Kongs role as a middlemanbetween China and the world gained in importance. Although US and Japanese sta-

JAPANESE AND US TRADE WITH CHINA 183



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tistics record by and large correctly the extent of imports from China, their exports toChina are often miscounted.This is because a large amount of Japanese and US exportsare first exported to some entities in Hong Kong. These entities can be traders or sub-sidiaries of multinationals. They purchase these Japanese or US goods, modify them

marginally and then re-export them to China. Since the Japanese and the US customsdo not have knowledge of their final destination (in this case, China), they are recordedas exports to Hong Kong. But when the Chinese Customs receive these goods, theyare still labeled as made in Japan or made in the USA, so they are counted by theChinese authorities as imports from Japan or imports from the USA. Re-exports causelarge discrepancies in Chinas trade data with other countries.



Table 1. Chinas Trade Figures (in US$ million)

Year JapanChina USAChina

Exports

1985 6,110 2,3401986 4,780 2,6301987 6,400 3,0401988 7,920 3,3801989 8,516 5,7551990 6,130 4,8061991 8,593 6,2861992 11,949 7,4181993 17,273 8,7631994 18,682 9,282

Imports1985 15,040 5,0901986 12,440 4,7201987 10,070 4,8301988 11,060 6,6301989 11,146 11,9901990 12,054 15,2371991 14,216 18,9691992 16,953 25,7281993 20,565 31,5401994 27,566 38,787

Trade balance1985 -8,930 -2,7501986 -7,660 -2,0901987 -3,670 -1,7901988 -3,140 -3,2501989 -2,630 -6,2351990 -5,924 -10,4311991 -5,623 -12,6831992 -5,004 -18,3101993 -3,292 -22,777

1994-

8,884-

29,505

Sources: Japan External Trade Organization, White Paper on Interna-tional Trade with Japan, various years; US Department of Commerce,US Trade Highlights, various years.


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In comparing US and Japanese trade with China, we need to incorporate HongKongs re-exports for more accurate measures of US and Japanese exports and tradebalances. From Table 2, in 1994, 62.8% of Japanese official exports were re-exports viaHong Kong, while 40% of US official exports were re-exports. Over the period198994, 60.5% of Japanese official exports were re-exported via Hong Kong. For thesame period, 32.0% of US exports were re-exported. These figures reveal that re-exports are important parts of these countries exports to China. In percentage terms,Hong Kong re-exports represent much larger fractions of Japanese exports to China

than do those of US exports.We assume that official exports record only those that are directly consigned toChina. The indirect exports (re-exports) have to be added to the official figures toget the true extent of exports from these countries. Since, in general, customs in bothcountries do trace the country of origins of their imports, we assume that the mea-surements of imports from China are basically correct.6 By subtracting imports fromthe adjusted exports, we get corrected versions of the trade balances.

It is easy to see that because of the existence of re-exports, both the adjusted Japan-ese and the adjusted US exports to China were, in reality, much higher than the USand Japanese official figures. As noted earlier, the adjusted Japanese exports would on

average be 60.5% higher than the official figures, while the adjusted US exports wouldon average be 32.0% higher than the official figures. This means that for both coun-tries, their trade deficits with China were in fact much smaller than reported. For theUSA, the deficits would be reduced from US$29.5 billion to US$25.8 billion in 1994.7

For the same year, Japanese trade balance with China would be changed from a deficitof US$8.9 billion to a surplus of US$2.8 billion. Indeed, for Japan, adjusting its exportsby re-exports via Hong Kong will turn Japans trade deficits with China into trade sur-pluses for all the years considered except two.

5. US and Japanese Exports to China by Product Category

Table 3 shows US and Japanese exports to China broken down into major commod-ity categories. General machinery was Japans largestexport category to China in 1994.As a share of Japanese exports, general machinery grew from 19% in 1989 to 25% in1994. Demand for machinery related to industrial plant projects grew rapidly, reflectingan increased amount of Japans investment in the manufacturing sector in China. Elec-



Table 2. Trade Balances Adjusted for Re-exports from Hong Kong (in US$ million)

Re-exports of Adjusted Re-exports of AdjustedJapanese products trade balance US products trade balance between

Year to China between Japan and China to China the USA and China

1994 11,723 2,839 3,709 -25,7961993 10,097 6,805 3,180 -19,5881992 7,178 2,174 2,350 -15,8561991 4,633 -990 1,710 -10,9791990 3,195 -2,729 1,320 -9,0971989 3,008 378 1,320 -4,861

Sources: Japan External Trade Organization, White Paper on International Trade with Japan, variousyears; Census and Statistics Department, Hong Kong, Hong Kong External Trade, various years; USDepartment of Commerce,US Foreign Trade Highlights, 1994.


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Table 3. US and Japanese exports to China by Industry (in US$ million)

Japanese exports

1989 1990 1991 1992 1993 1994 1989 1990

Total 8,516 6,130 8,593 11,949 17,273 18,682 5,755 4,806Foodstuffs 8, 25 8,25 8,28 8,33 8,30 8,54 1,144 8,527Textile 8,555 8,609 8,927 1,223 1,384 1,805 8,418 8,446Chemical goods 8,788 8,751 1,072 1,074 1,055 1,360 1,138 1,055Metal goods 2,541 1,193 1,554 1,735 3,367 2,713 8,366 8,111General machinery 1,596 1,034 1,497 2,865 4,590 4,678 1,032 8,849Electrical machinery 1,876 1,391 1,905 2,414 3,138 4,080 8,239 8,258Transportation eqt. 8,369 8,314 8,550 1,163 1,959 1,977 8,601 8,806

Source: National Trade Data Bank, 1995.

Table 4. The USJapan Rivalry Indexa

1989 1990 1991 1992

Total 0.81* 0.88* 0.85* 0.77*Foodstuffs 0.04* 0.09* 0.13* 0.18*Textile 0.86* 0.85* 0.72* 0.42*

Chemical goods 0.82* 0.83* 0.78* 0.94*Metal goods 0.25* 0.17* 0.23* 0.36*General machinery 0.79* 0.90* 0.83* 0.58*Electrical machinery 0.23* 0.31* 0.25* 0.32*Transportation eqt. 0.76* 0.56* 0.65* 0.67*

a An asterisk indicates that US exports were larger than those of Japan.


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trical machinery was thesecond largest export category in 1994. It has been one of thebiggest items in Japans exports to China, averaging 21% of its total exports from 1989to 1994. On the other hand, the exports of metal goods, which was Japans third largestexport category to China in 1994, decelerated in part because of the appreciation of

the yen, but also because of Chinas increased domestic production.Japans exports of transportation equipment rose considerably between 1989 and1994. Its share of the total exports to China increased from 4% in 1989 to 11% in 1994.Within transportation equipment, automobiles were particularly important becausethey accounted for a large portion of the category. There was also a surge in demandfor automobiles in China in 1991 when economic activities began to pick up after theretrenchment.

Turning to the US exports to China, the largestexport category in 1994 was trans-portation equipment. But its share dropped by 11% compared with 1993. This wasmostly due to decreased exports of aircraft. Thesecond largest export category was

general machinery, with its share rising slowly. Chemical goods was the third largestexport category. Following a slump in 1992 and 1993, the value of exported chemicalgoods in 1994 recovered to almost the 1991 level. Electrical machinery, with a share of10%, was the fourth largest export item. Although the share of electrical machinerymore than doubled from 4% in 1989 to close to 10%, US exports of electrical machin-ery were still less than one-third of the amount of electrical machinery exported byJapan to China. Purchases of US wheat by China often make headlines, but the fact isthat the export of foodstuffs to China was actually small compared with other exportitems. The share of exported food fell from 20% in 1989 to 4% in 1994.To a significantdegree, this reflects the rapid expansion of Chinas domestic agricultural production

owing to the higher prices generated by Chinas economic reforms.

6. A Simple Model of USJapan Competition in China

We offer here a very simple model of USJapan competition in China. It is a standardBranderSpencer (1994) model with two international firms. One firm is a US firm andthe other is Japanese. Both are exporting to a third market, China. The intention hereis not to create any new models, rather to derive from the model a quantitative indexof competition between the US and Japanese exporters. Let us denote the exports ofJapanese firm,X, selling forp, and that of American firm, Y, selling forp*. Then theprofit functions can be written:

where C() and C* () are the cost functions for the Japanese and American firms,respectively, and each function depends on its own output (Xand Y), its own wage (wand w*) , and its own cost of capital (i and i*). The first-order conditions associatedwith the profit-maximizing problem faced by the firms are

pX =p +XpX - CX = 0,p*Y =p* + Yp*Y - C*Y = 0.

The above equations are the reaction functions of the two firms in implicit form. Solvedsimultaneously, they yield the Nash equilibrium outputs, prices and profits.

To get an idea of the degree of competition or rivalry between Japanese and the US

p

p

= ( ) - ( )= ( ) - ( )

X p X Y C X w i

Y p X Y C Y w i

, , , ,

* * , * , *, * ,




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firms, we construct from the above model a rivalry index that captures a notion of com-petition. The formula for the rivalry index is

R thus measures one minus the absolute difference between the two countries exportsas a proportion of the total exports of the two countries. The basic idea is that inCournotNash models, profits are positively related to market shares. By capturing thedifference between exports of the firms, we are indirectly measuring a degree of com-petition between the firms based on differences in profits.8

Alternatively, we can view the index as measuring the similarity of the magnitudeof the two exports.This index is then a modified version of the GrubelLloyd index ofintraindustry trade.9 Instead of focusing on the similarity of imports and exports in thesame industry (as in the GrubelLloyd index), we focus on the similarity of the extent

of US and Japanese exports to China. The change in the rivalry index over time showsthe degree to which exports from one country dominate over the other. It equals onewhen there is most intense rivalry and it equals zero when there is no rivalry.

According to our index, overall, USJapan rivalry has been decreasing over time inChina (from 0.81 to 0.66; see Table 4). On an industry basis, the most intense compe-tition occurred in chemical goods and transportation equipment, with indices of 0.95and 0.93 respectively in 1994. In these industries, both Japan and the USA exportedalmost the same amounts. Textiles and general machinery were the next set of indus-tries with a great deal of competition (with indices of 0.61 and 0.58, respectively, in1994). Despite the intensity of competition in these two industries, the degree of rivalryhad actually declined since 1989, when the indices were 0.86 and 0.79, respectively.Finally, Table 3 shows that in 1994 the USA were ahead of Japan in China in threeindustries: foodstuffs, chemical goods, and transportation equipment. The USA wasbehind in textiles, chemical goods, general machinery, and electrical machinery.10

7. Conclusions

This paper provides a simple comparative analysis of Japanese and US trade withChina. In the 1980s, Japans trade with China was twice the volume of USChina trade.

During the 1990s, however, the USA became a more important trading partner toChina, mostly because of the sharp increase of US imports from China. From 1985 to1994, Japanese exports to China had been growing faster than US exports to China,while Japanese imports from China had been growing slower than imports from China.As a result, official US trade deficits with China had been much larger than officialJapanese trade deficits.

A significant amount of Japanese and US exports to China are first shipped to HongKong and then re-exported to China. Since the Japanese and US customs have no wayof knowing where these goods end up, they record them as exports to Hong Kong, andnot exports to China. The volume of re-exports is large. In 1994, 62.8% of Japanese

exports were re-exports via Hong Kong, while 40% of US exports were re-exports viaHong Kong. Thus, Japanese and US exports figures underestimate the true extent oftheir exports to China, and the underestimation is much larger for Japan than for theUSA.

In 1994, Japans largest export item to China was general machinery, followed byelectrical machinery and metal goods. For the USA, its largest export item was trans-

RX Y

X Y

= -

-

+

( )

1 .




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portation equipment, followed by general machinery and chemical goods. Based on asimple model of oligopolistic rivalry, we have calculated that competition between USand Japanese firms was most intense in chemical goods and transportation equipment,followed by textiles and general machinery. The USA was ahead of Japan in China in

only three industries: foodstuffs, chemical goods, and transportation equipment.

References

Brander, J. and P. Krugman, A Reciprocal Dumping Model of International Trade,Journal ofInternational Economics 15 (1993):31321.

Brander, J. and B. Spencer, Export Subsidies and International Market Share Rivalry,Journalof International Economics 18 (1985):83100.

Census and Statistics Department, Hong Kong, Hong Kong External Trade, various years., Hong Kong Trade Statistics, various years.Council of Economic Advisers, Economic Report of the President, United States Government

Printing Office, 1994.Finger, Michael J. and K. C. Fung, Can Competition Policies Control 301?Aussenwirtschaft

49 (1994):379416.Friedman, D. and K. C. Fung, International Trade and the Internal Organization of Firms: An

Evolutionary Approach,Journal of International Economics 41 (1996):11337.Fung, K. C.,Collusive Intra-Industry Trade, Canadian Journal of Economics v (May 1991):xxiv.,Accounting for Chinese Trade: Some National and Regional Considerations, in R.

Baldwin, R. Lipsey, and J. David Richardson (eds.), Economic Geography as a Basis for Eco-nomic Accounting, NBER Conference Volume, University of Chicago Press, forthcoming,1998.

, Trade and Investment: Mainland China, Hong Kong and Taiwan, Hong Kong Economic

Policy Studies, City University of Hong Kong Press, 1997.Fung, K. C. and Lawrence J. Lau, The ChinaUnited States Bilateral Trade Balance: How Big

Is It Really? Pacific Economic Review 3 (1998) forthcoming., Chinas Foreign Economic Relations, Occasional Paper,Asia/Pacific Research Center,

Stanford University, May 1997.General Administration of Customs of the Peoples Republic of China, Chinas Customs Sta-

tistics, Economic Information & Agency, Hong Kong, various years.Ho, Yin-Ping, Chinas Foreign Trade and the Reform of the Foreign Trade System, in Joseph

Chengy Yu-Shek and Maurice Brosseau (eds.), China Review, Hong Kong: Chinese Univer-sity Press, 1993.

International Monetary Fund, World Economic Outlook, Washington, DC, 1993.

Japan External Trade Organization, White Paper on International Trade, various years.Lardy, N., Chinese Foreign Trade, China Quarterly 131 (1992):691720., China in the World Economy, Washington, DC: Institute for International Economics,

1994.Lau, Lawrence J., The Chinese Economy in the Twenty-First Century, Working Paper,

Asia/Pacific Research Center, Stanford University, 1994., The Role of Government in Economic Development: Some Observations from the

Experience of China, Hong Kong and Taiwan, in M. Aoki, H-K Kim, and M. Okuno-Fujiwara (eds.), The Role of Government in East Asian Economic Development:A Compara-tive Institutional Analysis, Oxford: Oxford University Press, 1997.

Richardson, J. David, Sizing Up Export Disincentives, Washington, DC: Institute for Interna-tional Economics, 1993.

Sung, Yun-Wing, The ChinaHong Kong Connection, Cambridge: Cambridge University Press,1991.

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World Bank, China: Foreign Trade Reform, Washington, DC: World Bank Publication, 1993.WTO Newsletter 2, March/April 1995.

Notes

1. For a detailed discussion of Chinas trade and Chinas economic development and relatedissues, see Fung (1996, 1997), Lau (1994, 1997), Lardy (1994), Sung (1991),Wong (1995) and Fungand Lau (1997). For a comparative analysis of trade and the internal organization of firmsbetween the USA and Japan, see Friedman and Fung (1996).2. See Ho (1993), Sung (1991), Lardy (1992), and Fung (1996) for earlier descriptions of Chinastrade regime.3. For an analysis of the effects of the US Section 301 trade law, see Finger and Fung (1994).4. Taiwan was the second largest exporter to China in 1994. In examining this ranking, we donot treat the European Union as one single entity.This ranking is derived from Chinas CustomsStatistics, December 1994.

5. In considering trade deficits with China, we actually need to take the extent of Hong Kongre-exports into account.This will be done in a later section. See also Fung and Lau (1996) for adetailed discussion.6. Import figures can still be inflated because of the existence of markups on Hong Kong re-exports; see Fung and Lau (1996).7. If we include adjustments for re-export markups and net export of services, the deficits wouldbecome even smaller; see Fung and Lau (1996).8. For linear versions of this model, in fact, the difference between product price and marginalcost is positively related to the square of outputs. See Fung (1991) and Friedman and Fung(1996).9. See Brander and Krugman (1983) and Fung (1991).

10. Richardson (1993) discussed in detail how export disincentives in the USA may have hurtUS exports to China in some sectors.


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