Abstract
ABSTRACT This study analyzes how exchange rate risk exposure and foreign industry competition affect Chinese industries. Using the data from 2005 to 2018, the authors find that industry competition from the US has a statistically significant influence on 33.3 percent of Chinese industries. Unsurprisingly, tradable goods benefit more from depreciation of the Renminbi against the US dollar. Counterintuitively, only 20 percent of the industries supported by the ‘Made in China 2025’ initiative is sensitive to US industrial competition. In addition, on average Chinese industries face international competition from few developed countries, such as the Netherlands; and depreciation of RMB against the Japanese yen is hurting Chinese industries on average. Developing countries, however, exert marginal competition effects on their Chinese counterparts in the sample period.
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