The Dynamics of Structural Change - The European Union's Trade with China

Sino-European trade relations have affected Europe's bilateral comparative advantages over time. The change in bilateral trade is compared to the overall development of European trade to highlight the features of China's structural change. China is shown to be increasingly specializing in technology-intensive goods. The changes in the European Union's trade with China are stronger than the changes in its overall trade pattern. Based on technologically intensive production, focus is placed on China's integration into the worldwide value-added chain since intra-industry trade has become more prevalent in bilateral trade relations with China. Consideration of research-intensive Schumpeter goods finds that trade expansion between 1999 and 2008 was, to a great extent, of the intra-industry type. This has important implications for labor market adjustment costs in different industries.