We study the evolution of China's production and trade patterns during its integration into the global economy. Using firm-level microdata, we document how production and exports shifted across industries and within industries across firms. We quantify a Ricardian?Heckscher?Ohlin model with heterogeneous firms to account for these changes. Counterfactuals show capital deepening pushed China's production and exports toward greater capital intensity, while labor-biased productivity growth provided an offsetting force. The model generates an inverted-U pattern in China's trade openness?peaking in the mid-2000s and declining through the 2020s?alongside a continuous rise in the world's exposure to Chinese exports.

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29 March 2026

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International Economic Review 2026

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DOI: 10.1111/iere.70070

https://onlinelibrary.wiley.com/doi/10.1111/iere.70070

This Journal article is published under the centre's Trade programme.