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China'S Nexus Of Foreign Trade And Economic Growth: Making Sense Of The Anomaly

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  • Dic Lo

    ()
    (Department of Economics, SOAS, University of London, UK)

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    Abstract

    Using a range of specifications that are standard in the relevant literature, this paper finds that China’s rapid and sustained economic growth in the reform era has tended to be negatively correlated with its export growth and positively correlated with its import growth. This finding runs counter to widely-held perceptions on China’s nexus of foreign trade and economic growth, and thus presents a serious challenge for interpretation. On the basis of some further regression analyses, and drawing on a number of applied studies on the subject matter, the paper argues that the finding is plausible and of complex ramifications. The conclusion which this paper arrives at, therefore, is that the Chinese experience has tended to be a case of strategic integration into the world market, rather than conforming to the standard neoclassical thesis of trade regime neutrality.

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    File URL: http://www.soas.ac.uk/economics/research/workingpapers/file28836.pdf
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    Bibliographic Info

    Paper provided by Department of Economics, SOAS, University of London, UK in its series Working Papers with number 143.

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    Length: 35 pages
    Date of creation: Aug 2004
    Date of revision:
    Handle: RePEc:soa:wpaper:143

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    Keywords: China; foreign trade; economic growth;

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    1. Pack, Howard & Westphal, Larry E., 1986. "Industrial strategy and technological change : Theory versus reality," Journal of Development Economics, Elsevier, vol. 22(1), pages 87-128, June.
    2. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    3. Yu, Qiao, 1998. "Capital investment, international trade and economic growth in China: Evidence in the 1980-1990s," China Economic Review, Elsevier, vol. 9(1), pages 73-84.
    4. Jong-Wha Lee, 1994. "Capital Goods Imports and Long-Run Growth," NBER Working Papers 4725, National Bureau of Economic Research, Inc.
    5. Paul M. Romer, 1993. "New Goods, Old Theory, and the Welfare Costs of Trade Restrictions," NBER Working Papers 4452, National Bureau of Economic Research, Inc.
    6. David Greenaway & David Sapsford, . "What does Liberalisation do for Exports and Growth?," Working Papers ec4/94, Department of Economics, University of Lancaster.
    7. Dic Lo & Thomas M. H. Chan, 1998. "Machinery and China's nexus of foreign trade and economic growth," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(6), pages 733-749.
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