This box explores the implications of rising import penetration of Chinese products for the euro area labour market. As China advances into high value-added sectors, such as vehicles and specialised machinery, its exports increasingly challenge euro area firms across domestic and third-country markets. Panel regressions, following Autor et al. (2013), show that greater exposure per worker to imports from China is associated with a negative impact on the employment rate. Trade diversion effects arising from elevated US tariffs on Chinese goods are likely to intensify these trends, increasing China’s impact on euro area employment.
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