A China Shock After the Financial Shock? Analyzing Trade Between Germany, China, and Eastern Europe until 2018

This paper uses methodology from Autor, Dorn, and Hanson (2013) as well as Dauth, Findeisen, and Südekum (2014) to study the impact of trade between Germany and the “East”—both China and Eastern Europe—from 1988-2018. I use detailed administrative data in Germany to study variation in employment by industry on the local level, and use trade flows from other countries with similar levels of income to Germany as instruments. I find that trade is able to sustain German manufacturing employment due to the new markets available for export. However, contrary to Dauth, Findeisen and Südekum, I find that this is driven by trade with China instead of by trade with Eastern Europe.