The impact of import competition from China on firm-level productivity growth in the EU

We revisit the impact of rising imports from China on within-firm labour productivity growth in the EU. We analyse the period 2003-2016 which covers the recent increase in technology-intensive imports from China. We uncover a changing relationship over time. Higher fractions of Chinese imports in aggregate imports exert an adverse effect on productivity growth in in later periods, especially after the financial crisis 2008-09. This mirrors the changing nature of trade with China, reversing the growth-enhancing effect of import-competition. This effect is more pronounced for domestic firms, while multinationals are able to benefit from Chinese imports. Both effects become stronger at higher productivity-growth intensities. The growth-dampening effects particularly strong for firms in low-tech industries and in Southern Europe.