Extensive margin, quantity and price in China's export growth

We developed a methodology to decompose export growth into three margins: extensive margin, price and quantity. We then decomposed data on China's export trade with 140 partners in 2001 and 2007 into the three margins. We arrive at the following conclusions: China's export growth is mainly driven by quantity growth, which accounts for about 70% of overall export growth. This conclusion is robust for different partners, different industries and different techniques. To convert export quantity-driven growth into extensively margin- and quality-driven growth is a major challenge for the Chinese government and China's enterprises in the long term.

Research Highlights► We developed a methodology to decompose export growth into three margins. ► The three margins are extensive margin, price and quantity. ► We then decomposed China's export growth between 2001 and 2007. ► We found 70% China's export growth is driven by quantity growth. ► This conclusion is robust to different industries and different techniques.