# **3.1 Trade variables**

The dependent variables in the estimation of equations (2), (2<sup>_′_</sup> ), and (3) are constructed from the annual volume of China’s exports to 38 of its top markets for roughly 4700 6-digit Harmonized System (HS) products for the years 1992 to 2001 (table 1). The data derives from the World Integrated Trade System (WITS) COMTRADE data base. The dependent variable of equation (2) also requires data on Indian (country _d_ ) exports of the same 4700 products to 38 of China’s top markets. In our robustness checks, we also use data on the _value_ of Chinese and Indian exports to these markets. Our final estimation sample includes observations on the dependent variable from 1993 to 2001.

First consider the dependent variable in the estimation of equation (2), the difference between the annual growth of China’s exports to 38 different countries _i_ of commodity _h_ and India’s exports of the same commodities to the same countries. In choosing India as ‘country _d_ ’ in equation (2) we were guided by a desire to match as closely as possible China’s mix of export markets, its mix of exported goods, its relatively high aggregate growth rate of exports, and the relatively high number of antidumping measures imposed by the U.S. and EU between 1992-2001. Table 1 presents the shares of exports by economy for China and India in 1997, the midpoint of our sample. First, the U.S. and EU are important destination markets for both countries and represent a combined 31.0% (46.1%) of China’s (India’s) total exports. They share a number of other important export markets including Japan; South Korea; Singapore; Taiwan, China; Russia; Australia; Canada; and Malaysia. The biggest difference is that China’s top export market is Hong Kong SAR, China, with a 24.0% export share; while it receives only 5.6% of India’s exports. One likely explanation for this disparity was the role of entrepˆot trade Hong Kong SAR, China played for exports originating in China (Feenstra and Hanson, 2004).<sup>17</sup> Finally, export shares are similar in other years, but they do reflect some changes in the structure of trade over time.

Table 7 presents two pieces of data: the shares of China’s and India’s exports by broadly-defined goods categories for 1997, and the shares of total U.S. and EU antidumping against China and India for each of the goods categories. First, much like the pattern of overall use of the policy found in other research, metals is the primary industrial target for antidumping use against Indian and Chinese exports. Overall, each of the 15 different goods categories for Chinese exporters is affected by some U.S. or EU antidumping, whereas antidumping against Indian exporters is more heavily concentrated in fewer industries (metals, textiles and apparel, plastics, chemicals). In terms of the 17In the formal estimation, we have run specifications of the model that drop Hong Kong SAR, China as an export market, and we have also examined whether re-exports of Chinese goods from Hong Kong SAR, China might account for trade deflection. None of our results were affected by these considerations, though the estimates are available from the authors upon request.

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