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Trade and FDI Policies in an Interdependent World: Lessons From East Asia

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  • Cheng Chen
  • Zhang Chen
  • Chang Sun

Abstract

In this article, we examine the spillover effects of trade and FDI policy changes on countries that are not directly involved—that is third markets. Specifically, we investigate this issue using two cases: anti‐dumping tariffs imposed on Chinese exports and China's relaxation of restrictions on inward FDI. Our findings suggest that country‐specific tariffs do not necessarily lead to increased exports being redirected to non‐sanctioning countries—a phenomenon known as trade deflection. We also find that China's unilateral FDI liberalization prompted structural changes within Japanese multinational firms by reinforcing global value chains. Finally, we discuss how other barriers to trade and FDI flows—such as geopolitical tensions and health shocks—affect the behavior of Japanese multinational and domestic firms.

Suggested Citation

  • Cheng Chen & Zhang Chen & Chang Sun, 2026. "Trade and FDI Policies in an Interdependent World: Lessons From East Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 21(2), pages 133-142, July.
    • Handle: RePEc:bla:asiapr:v:21:y:2026:i:2:p:133-142
    DOI: 10.1111/aepr.70024
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