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Decomposing China-Japan-U.S. trade: Vertical specialization, ownership, and organizational form

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  • Dean, Judith M.
  • Lovely, Mary E.
  • Mora, Jesse

Abstract

We use the US International Trade Commission's uniquely detailed 1995-2007 Chinese Customs data to better understand the pattern of trade between China and its two largest trading partners, Japan and the United States. Our review finds that only a small share of these flows can be characterized as arm's length, one-way trade in final goods. Instead, we find extensive two-way trade, deep vertical specialization, concentration of trade in computer and communication devices, and a prominent role for foreign-invested enterprises. While these characteristics define both bilateral relationships, important differences between the two pairs do emerge, suggesting that trade costs influence the method by which multinationals choose to integrate their production with China. Consequently, we argue that dialogue on East Asian trade liberalization should include the possibility of significant production gains for the US from its inclusion in any regional agreements.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 20 (2009)
Issue (Month): 6 (November)
Pages: 596-610

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Handle: RePEc:eee:asieco:v:20:y:2009:i:6:p:596-610

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Web page: http://www.elsevier.com/locate/asieco

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Keywords: Trade Asia Regional integration Fragmentation FDI;

References

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Citations

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Cited by:
  1. Singh, Nirvikar & Mora, Jesse & Carolan, Terrie, 2012. "Trade Dynamics in the East Asian Miracle: A Time Series Analysis of U.S.-East Asia Commodity Trade, 1962-1992," Santa Cruz Department of Economics, Working Paper Series qt0fm1r83r, Department of Economics, UC Santa Cruz.
  2. Jarko Fidrmuc & Iikka Korhonen & Ivana Bátorová, 2013. "China in the World Economy: Dynamic Correlation Analysis of Business Cycles," CESifo Economic Studies, CESifo, vol. 59(2), pages 392-411, June.
  3. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2011. "Give Credit where Credit is Due: Tracing Value Added in Global Production Chains," Working Papers 312011, Hong Kong Institute for Monetary Research.
  4. Christopher Edmonds & Yao Li, 2010. "A New Perspective On China Trade Growth: Application Of A New Index Of Bilateral Trade Intensity," Working Papers 201025, University of Hawaii at Manoa, Department of Economics.
  5. Chad P. Bown & Rachel McCulloch, 2012. "Antidumping and Market Competition: Implications for Emerging Economies," Working Papers 50, Brandeis University, Department of Economics and International Businesss School.
  6. Bown, Chad P. & McCulloch, Rachel, 2009. "U.S.-Japan and U.S.-China trade conflict: Export growth, reciprocity, and the international trading system," Journal of Asian Economics, Elsevier, vol. 20(6), pages 669-687, November.
  7. Jesse Mora & Nirvikar Singh, 2013. "Trade productivity upgrading, trade fragmentation, and FDI in manufacturing: The Asian development experience," Indian Growth and Development Review, Emerald Group Publishing, vol. 6(1), pages 61-87, March.
  8. Nobuaki Hamaguchi & Silvio Miyazaki & Leonardo Correia, 2014. "State Space Application to Recent Automobile Sector Triangle Trade between Japan and Latin America," Discussion Paper Series DP2014-05, Research Institute for Economics & Business Administration, Kobe University.
  9. Fukumoto, Mayumi, 2012. "Estimation of China's disaggregate import demand functions," China Economic Review, Elsevier, vol. 23(2), pages 434-444.

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