Impact of China’s accession to WTO and the financial crisis on China’s exports to Germany

Purpose: We focus on systematically discussing the impact of China’s accession to WTO and the financial crisis on China’s exports to Germany, particularly in agricultural products, based on some most recent proposals. Design/methodology/approach: The study follows a two-stage framework. Firstly, structural breaks caused by those events are detected. Then suitable econometric models and a new treeform Constant Market Share (CMS) model are fitted to discover the long-term impact of those events on the trade relationship between China and Germany and the growth causes of China’s exports to Germany. Findings: We found that China’s accession to WTO had a negative short-term impact on China’s exports and its market share in agricultural products, but a positive short-term impact on its market share in industrial products and a positive long-term impact on its exports and market share in both classes, which also resulted in a more regular trade relationship between China and Germany. The tree-form CMS model shows the growth amount of China’s exports to Germany due to competitiveness after this event was much higher than before. The financial crisis exhibited a negative short-term impact on China’s exports to Germany, but a positive short-term impact on China’s market share and the trade relationship between both countries in industrial products. China’s market share in agricultural products was not clearly affected by the financial crisis. Originality/value: This paper reviews and applies some recent proposals. It also contributes by introducing some suitable econometric models for quantifying the shortand long-term impact of remarkable events on international trade relationship.