The Rise of China and the Rebound in Korea’s Manufacturing Employment

Abstract

Over the last three decades, the world has experienced a substantial increase in Chinese import penetration due to the rapid improvement in China’s supply productivity, which is often called the “China shock” or “China syndrome.” The existing literature have shown that the increase in imports from China due to the China shock adversely affected the manufacturing employment of a number of advanced countries such as the U.S., Norway, Denmark, and Spain. Unlike those advanced countries, South Korea has shown a pronounced increase in exports to China as well as imports from China since the 1990s. Over the same time, furthermore, Korea’s manufacturing employment has shown a stagnated downward trend compared to other advanced economies and even rebounded since the mid-2000s. Given these motivations, this study investigates both import and export channels to explore how the China trade shocks affected the exceptional trend in Korea’s manufacturing employment from 1993 through 2015.