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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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  • Dong He

    (Research Department, Hong Kong Monetary Authority)

  • Wenlang Zhang

    (Research Department, Hong Kong Monetary Authority)

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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 different 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 commonly thought. 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

Paper provided by Hong Kong Monetary Authority in its series Working Papers with number 0814.

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Length: 36 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:hkg:wpaper:0814

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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. Gene M. Grossman & Elhanan Helpman, 1990. "Trade, Knowledge Spillovers, and Growth," NBER Working Papers 3485, National Bureau of Economic Research, Inc.
  2. Alcala, Francisco & Ciccone, Antonio, 2001. "Trade and Productivity," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3095, C.E.P.R. Discussion Papers.
  3. Dong He & Lillian Cheung & Jian Chang, 2007. "Sense and Nonsense on Asia's Export Dependency and The Decoupling Thesis," Working Papers, Hong Kong Monetary Authority 0703, Hong Kong Monetary Authority.
  4. Venet, Baptiste & Hurlin, Christophe, 2001. "Granger Causality Tests in Panel Data Models with Fixed Coefficients," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/6159, Paris Dauphine University.
  5. Robert C. Feenstra & Chang Hong, 2007. "China's Exports and Employment," NBER Working Papers 13552, National Bureau of Economic Research, Inc.
  6. 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.
  7. Dong He & Wenlang Zhang & Jimmy Shek, 2007. "How Efficient Has Been China'S Investment? Empirical Evidence From National And Provincial Data," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 12(5), pages 597-617, December.
  8. Kui-Wai Li, 2003. "China's Capital and Productivity Measurement Using Financial Resources," Working Papers, Economic Growth Center, Yale University 851, Economic Growth Center, Yale University.
  9. 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, American Economic Association, vol. 84(1), pages 66-83, March.
  10. Panagariya, Arvind, 1991. "Unraveling the mysteries of China's foreign trade regime : a view from Jiangsu Province," Policy Research Working Paper Series, The World Bank 801, The World Bank.
  11. Xiaolan Fu, 2004. "Exports, Technical Progress and Productivity Growth in Chinese Manufacturing Industries," ESRC Centre for Business Research - Working Papers, ESRC Centre for Business Research wp278, ESRC Centre for Business Research.
  12. Steven Barnett & Ray Brooks, 2006. "What's Driving Investment in China?," IMF Working Papers, International Monetary Fund 06/265, International Monetary Fund.
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Citations

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Cited by:
  1. Akkemik, K. Ali & Göksal, Koray, 2012. "Energy consumption-GDP nexus: Heterogeneous panel causality analysis," Energy Economics, Elsevier, Elsevier, vol. 34(4), pages 865-873.
  2. Dong He & Wei Liao, 2012. "Asian Business Cycle Synchronization," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 17(1), pages 106-135, 02.
  3. 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.
  4. Sun, Sizhong, 2012. "The role of FDI in domestic exporting: Evidence from China," Journal of Asian Economics, Elsevier, Elsevier, vol. 23(4), pages 434-441.
  5. Roberts, Ivan & Rush, Anthony, 2012. "Understanding China's demand for resource imports," China Economic Review, Elsevier, Elsevier, vol. 23(3), pages 566-579.
  6. 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, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(s1), pages 70-87.
  7. Bera, Soumitra Kumar, 2010. "Financial crisis: The incrediable hulk in Indian economic growth and external sector," MPRA Paper 27750, University Library of Munich, Germany.
  8. Frank Leung & Gaofeng Han & Kevin Chow, 2009. "Financial Services Sector as a Driver of Productivity Growth in Hong Kong," Working Papers, Hong Kong Monetary Authority 0914, Hong Kong Monetary Authority.
  9. Yuqing Xing & Manisha Pradhananga, 2013. "How Important is Exports and FDI for China's Economic Growth?," GRIPS Discussion Papers, National Graduate Institute for Policy Studies 13-04, National Graduate Institute for Policy Studies.
  10. 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, Asian Development Bank Institute 427, Asian Development Bank Institute.
  11. Il Houng Lee & Murtaza H. Syed & Liu Xueyan, 2013. "China’s Path to Consumer-Based Growth," IMF Working Papers, International Monetary Fund 13/83, International Monetary Fund.
  12. Zhiwei Zhang, 2008. "Can Demand from China Shield East Asian Economies from Global Slowdown?," Working Papers, Hong Kong Monetary Authority 0819, Hong Kong Monetary Authority.

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