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China and emerging Asia: comrades or competitors?

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Author Info
Alan Ahearne
John Fernald
Prakash Loungani
John Schindler

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Abstract

We explore whether increases in China’s exports reduce exports of other emerging Asian economies. We find that correlations between Chinese export growth and that of other emerging Asian economies are actually positive (though often not significantly so), even after controlling for the effects of income growth of trading partners and real effective exchange rates. We also present results from a VAR estimation of aggregate trade equations on the relative importance of foreign income and exchange rates in the determination of Asian export growth. An important finding is that, while exchange rates do matter for export performance, the income growth of trading partners matters even more. In addition, we examine specific products and find evidence that a considerable shifting of trade patterns is taking place, consistent with a ‘flying geese’ pattern in which China and ASEAN-4 move into the product space vacated by the NIEs. Overall, our results suggest that China and emerging Asia are both comrades and competitors. Disclaimer: The views expressed here are those of the authors and should not be attributed to the Federal Reserve Board, the Federal Reserve Bank of Chicago, or the International Monetary Fund.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-03-27.

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Date of creation: 2003
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Handle: RePEc:fip:fedhwp:wp-03-27

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Keywords: Exports Foreign exchange rates Trade Economic conditions - China Exports - China

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. John Fernald & Hali Edison & Prakash Loungani, 1998. "Was China the first domino? assessing links between China and the rest of emerging Asia," International Finance Discussion Papers 604, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  2. Bonin, John P. & Huang, Yiping, 2001. "Dealing with the bad loans of the Chinese banks," Journal of Asian Economics, Elsevier, vol. 12(2), pages 197-214. [Downloadable!] (restricted)
  3. John P. Bonin & Yiping Huang, 2001. "Dealing with the Bad Loans of the Chinese Banks," William Davidson Institute Working Papers Series 357, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  4. Carolan, Terrie & Singh, Nirvikar & Talati, Cyrus, 1998. "The composition of U.S.-East Asia trade and changing comparative advantage," Journal of Development Economics, Elsevier, vol. 57(2), pages 361-389. [Downloadable!] (restricted)
  5. Fernald, John & Edison, Hali & Loungani, Prakash, 1999. "Was China the first domino? Assessing links between China and other Asian economies," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 515-535, August. [Downloadable!] (restricted)
  6. Diwan, Ishac & Hoekman, Bernard, 1999. "Competition, Complementarity and Contagion in East Asia," CEPR Discussion Papers 2112, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. ABEYSINGHE, Tilak & LU, Ding, 2003. "China as an economic powerhouse: Implications on its neighbors," China Economic Review, Elsevier, vol. 14(2), pages 164-185. [Downloadable!] (restricted)
  8. Alan G. Ahearne & John G. Fernald & Prakash Loungani, 2001. "Countering contagion: Does China's experience offer a blueprint?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 38-52. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Masakazu Watanuki & Renato Galvão Flôres Junior, 2006. "Is China a Northern Partner to Mercosul?," Economics Working Papers (Ensaios Economicos da EPGE) 617, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  2. Arslan Razmi, 2006. "Pursuing Manufacturing-BasedExport-Led Growth: Are Developing Countries Increasingly Crowding Each Other Out?," Working Papers 2006-05, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
  3. Prema-chandra Athukorala, 2007. "The Rise of China and East Asian Export Performance: Is the Crowding-out Fear Warranted?," Departmental Working Papers 2007-10, Australian National University, Economics RSPAS. [Downloadable!]
  4. Harm Zebregs, 2004. "Intraregional Trade in Emerging Asia," IMF Policy Discussion Papers 04/1, International Monetary Fund. [Downloadable!]
  5. Kumakura, Masanaga & Kuroko, Masato, 2007. "China's Impact on the Exports of Other Asian Countries: A Note," IDE Discussion Papers 131, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
  6. Benoît Mercereau, 2005. "FDI Flows to Asia: Did the Dragon Crowd Out the Tigers?," IMF Working Papers 05/189, International Monetary Fund. [Downloadable!]
  7. Barry Eichengreen & Hui Tong, 2005. "Is China's FDI Coming at the Expense of Other Countries?," NBER Working Papers 11335, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Willem THORBECKE, 2006. "The Effect of Exchange Rate Changes on Trade in East Asia," Discussion papers 06009, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  9. Mauricio Mesquita Moreira, 2004. "Fear of China: Is there a future for manufacturing in Latin America?," Development and Comp Systems 0412008, EconWPA. [Downloadable!]
    Other versions:
  10. Barry Eichengreen & Yeongseop Rhee & Hui Tong, 2004. "The Impact of China on the Exports of Other Asian Countries," NBER Working Papers 10768, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Willem Thorbecke, 2006. "How Would an Appreciation of the Renminbi Affect the U.S. Trade Deficit with China?," Topics in Macroeconomics, Berkeley Electronic Press, vol. 6(3), pages 1454-1454. [Downloadable!] (restricted)
  12. Lee Branstetter & Nicholas Lardy, 2006. "China's Embrace of Globalization," NBER Working Papers 12373, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Barry Eichengreen & Yeongseop Rhee & Hui Tong, 2007. "China and the Exports of Other Asian Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(2), pages 201-226, April. [Downloadable!] (restricted)
  14. Alan G. Ahearne & John G. Fernald & Prakash Loungani & John W. Schindler, 2006. "Flying geese or sitting ducks: China’s impact on the trading fortunes of other Asian economies," International Finance Discussion Papers 887, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  15. Paresh Kumar Narayan & Russell Smyth, 2004. "Temporal Causality and the Dynamics of Exports, Human Capital and Real Income in China," The International Journal of Applied Economics, Department of General Business, Southeastern Louisiana University, vol. 1(1), pages 24-45, September. [Downloadable!]
  16. Colavecchio , Roberta & Funke, Michael, 2006. "Volatility transmissions between renminbi and Asia-Pacific on-shore and off-shore U.S. dollar futures," BOFIT Discussion Papers 16/2006, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  17. Masanaga Kumakura & Masato Kuroko, 2008. "China's Impact on the Exports of Other Asian Countries: A Note," Economics Bulletin, Economics Bulletin, vol. 6(5), pages 1-15. [Downloadable!]
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