Supply Constraints and Shifts in Import Sourcing
Overview
This paper examines the suspension of neon gas supplies from Ukraine and China’s export controls on gallium and germanium. Using detailed product-level trade data by importing country, it estimates differences in import adjustments according to prior dependence on the country concerned, using a triple-difference method and an event study. In the Ukraine case, countries with greater prior dependence reallocated import values among existing alternative suppliers, and supplier concentration temporarily declined. In the China case, no robust changes indicating reduced dependence on China or a more diversified supplier composition were found. The comparison suggests that it is necessary to consider the form in which constraints arise and the availability of alternative supplies in the short term.
Key points
- In the Ukraine case, countries with greater prior dependence reallocated import values after the supply suspension, temporarily reducing supplier concentration.
- In the China case, no robust changes indicating reduced dependence on China or a more diversified supplier composition were found.
- The comparison of the two cases suggests considerations for responding to supply constraints.
Overview
This paper examines changes in import sourcing in response to supply constraints affecting critical materials. It focuses on the suspension of neon gas supplies from Ukraine and China’s export controls on gallium and germanium.
This paper is a revised version of a report presented at the 11th Joint Conference, “Transition to an Economy of Supply Constraints: Implications and Challenges,” held on November 26, 2025, by the Center for Advanced Finance at the University of Tokyo and the Research and Statistics Department of the Bank of Japan.
Impact
Understanding responses to supply constraints requires considering both how the constraints arise and the availability of alternative supplies in the short term.
Details
The analysis uses detailed product-level trade data by importing country and estimates differences in import adjustments according to prior dependence on the country concerned, using a triple-difference method and an event study. The JEL classification numbers are F14, F13, and F52. Ayako Obashi of the Faculty of Economics at Keio University expresses gratitude for comments from the discussants and conference participants, and states that any remaining errors are her own. The Bank of Japan states that the content and opinions in the paper do not represent its official views.