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People's Republic of China and its Neighbours: evidence on regional trade and investment effects

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  • David Roland‐Holst
  • John Weiss

Abstract

The very rapid economic growth of the People's Republic of China (PRC), its dramatic success in world export markets and its heavy receipts of foreign direct investment (FDI) have generated much thought and debate in policy and business circles in different parts of the world. This paper surveys evidence from research by ADB Institute staff and Visiting Fellows conducted over the last two years that sheds light on these issues. The paper examines differences in trade structure between the PRC and its trading partners, finding that the PRC's current structure is closest to that of Korea and Taipei, China in 1990. It also considers changes in market share and finds that the PRC exports are eroding the market share of its regional neighbours in the USA and Japan, particularly in products in which trading partners are most specialised. There is no evidence of FDI diversion from elsewhere in the region to PRC. The trade diversion effects in the US and Japan are offset however by strong trade creation as the rapid growth in PRC leads to a substantial rise in its imports. The paper surveys the projections of models that demonstrate the gains in greater trade and income for the region from closer trade links with the PRC. The broad conclusion that emerges is that whilst there may be risks to individual sectors in all countries concerned, the pattern of regional trade and investment that is emerging is mutually beneficial, provided enterprises and governments representing the PRC's regional partners respond effectively to the adjustments required.

Suggested Citation

  • David Roland‐Holst & John Weiss, 2005. "People's Republic of China and its Neighbours: evidence on regional trade and investment effects," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 19(2), pages 18-35, November.
    • Handle: RePEc:bla:apacel:v:19:y:2005:i:2:p:18-35
    DOI: 10.1111/j.1467-8411.2005.00165.x-i1
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    References listed on IDEAS

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    1. Lall, Sanjaya & Albaladejo, Manuel, 2004. "China's Competitive Performance: A Threat to East Asian Manufactured Exports?," World Development, Elsevier, vol. 32(9), pages 1441-1466, September.
    2. John Weiss & Hossein Jalilian, 2004. "Industrialization in an age of globalization: some comparisons between East and South East Asia and Latin America," Oxford Development Studies, Taylor & Francis Journals, vol. 32(2), pages 283-307.
    3. David Roland Holst & John Weiss, 2004. "ASEAN and China: Export Rivals or Partners in Regional Growth?," The World Economy, Wiley Blackwell, vol. 27(8), pages 1255-1274, August.
    4. Hiro Lee & David Roland-Holst & Dominique van der Mensbrugghe, 2004. "China's Emergence and the Implications of Prospective Free Trade Agreements in East Asia," Discussion Paper Series 156, Research Institute for Economics & Business Administration, Kobe University.
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    Cited by:

    1. Fu, Xiaolan & Kaplinsky, Raphael & Zhang, Jing, 2012. "The Impact of China on Low and Middle Income Countries’ Export Prices in Industrial-Country Markets," World Development, Elsevier, vol. 40(8), pages 1483-1496.
    2. Faria, João Ricardo & Mollick, André Varella & Albuquerque, Pedro H. & León-Ledesma, Miguel A., 2009. "The effect of oil price on China's exports," China Economic Review, Elsevier, vol. 20(4), pages 793-805, December.
    3. Peter E Robertson & Jessica Y Xu, 2010. "In China's Wake: Has Asia Gained From China's Growth?," Economics Discussion / Working Papers 10-15, The University of Western Australia, Department of Economics.

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