Economics in a picture
From 1993 to 2008, the increased competition of Chinese exports had a negative impact on employment and wages of Portuguese workers in the most exposed sectors
The strong growth of Chinese exports can impact an economy not only through intensifying competition in the domestic market, but also in foreign markets. In fact, in the recent past, the large export market share gains of China in low-technology, low-skill products, like textiles, clothing, footwear, and electric appliances, were accompanied by losses in the export shares of several countries, including Portugal.
In the period 1993-2008, Portuguese workers in industries more exposed to this indirect competition from China saw their total cumulative wages and employment fall when compared to similar workers in less exposed industries. Some particular groups of workers were more affected by the Chinese competition in international markets, namely women, older and less educated workers. In the last years, the effects of Chinese competition in third-country export markets should have become more comprehensive, given the growing sophistication of China’s exports, which now compete in virtually all industries in which developed economies operate. Analyses that allow for a differentiation of the effects of trade are essential for public policies aimed at supporting workers affected by globalisation.
For more details, see Sónia Cabral, Pedro S. Martins, João Pereira dos Santos and Mariana Tavares, “Collateral Damage? Labour Market Effects of Competing with China - at Home and Abroad”, Banco de Portugal working paper No. 12/2018, June 2018.
Prepared by Sónia Cabral. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.
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