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How dependent is the Chinese economy on exports and in what sense has its growth been export-led?

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  • He, Dong
  • Zhang, Wenlang
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Abstract

This paper studies the interaction between foreign trade and domestic demand and supply in China's economic transformation. It compares China's export dependency with other economies using input-output analysis. The paper also conducts econometric analysis of provincial level data to examine causality between the growth of foreign trade and components of domestic demand, and causality between the growth of foreign trade and total factor productivity. The main message is that China's export dependency is significantly lower than implied by the headline exports-to-GDP ratio. Moreover, the contribution of export to economic growth in China came mainly from its impact on total factor productivity growth from a supply perspective rather than its multiplier effect from a demand perspective. This relationship was found to be stronger in the more developed coastal areas than in the less developed inland areas.

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Bibliographic Info

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

Volume (Year): 21 (2010)
Issue (Month): 1 (February)
Pages: 87-104

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Handle: RePEc:eee:asieco:v:21:y:2010:i:1:p:87-104

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Keywords: Export-led growth Export dependency Input-output analysis Malmquist index;

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References

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  1. Dong He & Wenlang Zhang & Jimmy Shek, 2006. "How Efficient Has Been China's Investment? Empirical Evidence from National and Provincial Data," Working Papers 0619, Hong Kong Monetary Authority.
  2. Dong He & Lillian Cheung & Jian Chang, 2007. "Sense and Nonsense on Asia's Export Dependency and The Decoupling Thesis," Working Papers 0703, Hong Kong Monetary Authority.
  3. Francisco Alcalá & Antonio Ciccone, 2003. "Trade and Productivity," Working Papers 12, Barcelona Graduate School of Economics.
  4. Robert C. Feenstra & Chang Hong, 2007. "China's Exports and Employment," NBER Working Papers 13552, National Bureau of Economic Research, Inc.
  5. Kui-Wai Li, 2003. "China's Capital and Productivity Measurement Using Financial Resources," Working Papers 851, Economic Growth Center, Yale University.
  6. Grossman, Gene M. & Helpman, Elhanan, 1991. "Trade, knowledge spillovers, and growth," European Economic Review, Elsevier, vol. 35(2-3), pages 517-526, April.
  7. Xiaolan Fu, 2004. "Exports, Technical Progress and Productivity Growth in Chinese Manufacturing Industries," ESRC Centre for Business Research - Working Papers wp278, ESRC Centre for Business Research.
  8. Venet, Baptiste & Hurlin, Christophe, 2001. "Granger Causality Tests in Panel Data Models with Fixed Coefficients," Economics Papers from University Paris Dauphine 123456789/6159, Paris Dauphine University.
  9. Panagariya, Arvind, 1991. "Unraveling the mysteries of China's foreign trade regime : a view from Jiangsu Province," Policy Research Working Paper Series 801, The World Bank.
  10. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2008. "How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive," NBER Working Papers 14109, National Bureau of Economic Research, Inc.
  11. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
  12. Steven Barnett & Ray Brooks, 2006. "What's Driving Investment in China?," IMF Working Papers 06/265, International Monetary Fund.
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Cited by:
  1. Akkemik, K. Ali & Göksal, Koray, 2012. "Energy consumption-GDP nexus: Heterogeneous panel causality analysis," Energy Economics, Elsevier, vol. 34(4), pages 865-873.
  2. Il Houng Lee & Murtaza H. Syed & Liu Xueyan, 2013. "China’s Path to Consumer-Based Growth," IMF Working Papers 13/83, International Monetary Fund.
  3. Sun, Sizhong, 2012. "The role of FDI in domestic exporting: Evidence from China," Journal of Asian Economics, Elsevier, vol. 23(4), pages 434-441.
  4. Dong He & Wei Liao, 2011. "Asian Business Cycle Synchronisation," Working Papers 062011, Hong Kong Institute for Monetary Research.
  5. Yuqing Xing & Manisha Pradhananga, 2013. "How Important is Exports and FDI for China's Economic Growth?," GRIPS Discussion Papers 13-04, National Graduate Institute for Policy Studies.
  6. Bera, Soumitra Kumar, 2010. "Financial crisis: The incrediable hulk in Indian economic growth and external sector," MPRA Paper 27750, University Library of Munich, Germany.
  7. Roberts, Ivan & Rush, Anthony, 2012. "Understanding China's demand for resource imports," China Economic Review, Elsevier, vol. 23(3), pages 566-579.
  8. Yang, hongqiang & Ji, Chunyi & Nie, Ning & Hong, Yinxing, 2012. "China’s wood furniture manufacturing industry: industrial cluster and export competitiveness," MPRA Paper 44282, University Library of Munich, Germany.
  9. Frank Leung & Gaofeng Han & Kevin Chow, 2009. "Financial Services Sector as a Driver of Productivity Growth in Hong Kong," Working Papers 0914, Hong Kong Monetary Authority.
  10. Luigi Bonatti & Andrea Fracasso, 2010. "Global Rebalancing and the Future of the Sino-US Codependency," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(s1), pages 70-87.
  11. Xing, Yuqing & Pradhananga, Manisha, 2013. "How Important are Exports and Foreign Direct Investment for Economic Growth in the People’s Republic of China?," ADBI Working Papers 427, Asian Development Bank Institute.
  12. Zhiwei Zhang, 2008. "Can Demand from China Shield East Asian Economies from Global Slowdown?," Working Papers 0819, Hong Kong Monetary Authority.

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