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Business cycle co-movements and transmission channels: evidence from China

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  • Huifang Cheng
  • Lijun Cen
  • Yu Wang
  • Hongyi Li

Abstract

This article examines the impacts of international trade, foreign direct investment (FDI) and industrial structure on international business cycle co-movements between China and its major trading partners. We investigate the principal transmission factors of business cycle co-movements and their contributions to China’s economic growth in the context of economic globalization. Through studying the 27 major trading partners during 1990–2015, we find that, from China’s perspective, the synchronization tendency was continuously growing before the 2008 financial crisis but slowed down or even reversed after the crisis. Bilateral trade intensity and FDI intensity contributed more to cyclical co-movement behaviors between China and its emerging market partners, but less to economic synchronization between China and its advanced economic partners. Industrial structure similarity, on the contrary, could explain the co-movement behaviors between China and its advanced economic partners, but not emerging market partners. China’s past economic growth was also significantly correlated with the economic performance of its non-Asian trading partners, but not Asian neighbors.

Suggested Citation

  • Huifang Cheng & Lijun Cen & Yu Wang & Hongyi Li, 2020. "Business cycle co-movements and transmission channels: evidence from China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 25(2), pages 289-306, April.
    • Handle: RePEc:taf:rjapxx:v:25:y:2020:i:2:p:289-306
    DOI: 10.1080/13547860.2019.1651185
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    Cited by:

    1. Jakub Borowski & Adam Czerniak & Beáta Farkas, 2023. "Diverse Models of Capitalism and Synchronization of Business Cycles," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(4), pages 681-712, December.
    2. Quintero Otero, Jorge David & Padilla Sierra, Alcides de Jesús, 2024. "Impacto de la sincronización sub-nacional sobre el comportamiento de los ciclos nacionales en economías emergentes con inflación objetivo," Documentos Departamento de Economía 54, Universidad del Norte.
    3. Shen, Jiancheng & Selover, David D. & Li, Chao & Yousefi, Hamed, 2022. "An ocean apart? The effects of US business cycles on Chinese business cycles," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 677-698.
    4. MB Hendrie Anto & Faaza Fakhrunnas & Yunice Karina Tumewang, 2022. "Islamic banks credit risk performance for home financing: Before and during Covid-19 pandemic," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 14(1), pages 113-125.

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