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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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  • He, Dong
  • Zhang, Wenlang

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 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 implied by the headline exports-to-GDP ratio. 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.

Suggested Citation

  • He, Dong & Zhang, Wenlang, 2010. "How dependent is the Chinese economy on exports and in what sense has its growth been export-led?," Journal of Asian Economics, Elsevier, vol. 21(1), pages 87-104, February.
  • Handle: RePEc:eee:asieco:v:21:y:2010:i:1:p:87-104
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    Cited by:

    1. Bera, Soumitra Kumar, 2010. "Financial crisis: The incrediable hulk in Indian economic growth and external sector," MPRA Paper 27750, University Library of Munich, Germany.
    2. Frank Leung & Gaofeng Han & Kevin Chow, 2009. "Financial Services Sector as a Driver of Productivity Growth in Hong Kong," Working Papers 0914, Hong Kong Monetary Authority.
    3. repec:eee:ecolec:v:139:y:2017:i:c:p:102-114 is not listed on IDEAS
    4. Giorgio Prodi & Federico Frattini & Francesco Nicolli, 2016. "Regional Innovation Systems in China: A long-term perspective based on patent data at the prefectural level," SEEDS Working Papers 0316, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Apr 2016.
    5. Bosupeng, Mpho, 2015. "The Export-Led Growth Hypothesis: New Evidence and Implications," MPRA Paper 77917, University Library of Munich, Germany, revised Jun 2015.
    6. 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.
    7. Akkemik, K. Ali & Göksal, Koray, 2012. "Energy consumption-GDP nexus: Heterogeneous panel causality analysis," Energy Economics, Elsevier, vol. 34(4), pages 865-873.
    8. Dong He & Wei Liao, 2012. "Asian Business Cycle Synchronization," Pacific Economic Review, Wiley Blackwell, vol. 17(1), pages 106-135, February.
    9. Zhiwei Zhang, 2008. "Can Demand from China Shield East Asian Economies from Global Slowdown?," Working Papers 0819, Hong Kong Monetary Authority.
    10. Akkemik, K. Ali & Göksal, Koray & Li, Jia, 2012. "Energy consumption and income in Chinese provinces: Heterogeneous panel causality analysis," Applied Energy, Elsevier, pages 445-454.
    11. Roberts, Ivan & Rush, Anthony, 2012. "Understanding China's demand for resource imports," China Economic Review, Elsevier, vol. 23(3), pages 566-579.
    12. Kerr, William A., 2016. "Disequilibrium, Trade and the Consequenses of Adjustment," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 17(2).
    13. Il Houng Lee & Murtaza H Syed & Liu Xueyan, 2013. "China’s Path to Consumer-Based Growth; Reorienting Investment and Enhancing Efficiency," IMF Working Papers 13/83, International Monetary Fund.
    14. Bosupeng, Mpho, 2015. "On Exports and Economic Growth-Multifarious Economies Perspective," MPRA Paper 77922, University Library of Munich, Germany, revised 2015.
    15. 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, vol. 18(s1), pages 70-87.
    16. Bosupeng, Mpho, 2015. "Exports Multiplicity and The Dutch Disease," MPRA Paper 77919, University Library of Munich, Germany, revised 2015.
    17. Sun, Sizhong, 2012. "The role of FDI in domestic exporting: Evidence from China," Journal of Asian Economics, Elsevier, pages 434-441.
    18. Fujii-Gambero, Gerardo & Cervantes-Martínez, Rosario, 2015. "Origin and Destination Sectors of Indirect Domestic Value Added Embodied in Mexico's Manufacturing Exports," MPRA Paper 72977, University Library of Munich, Germany, revised 2016.
    19. Rosario Cervantes-Martínez & Jorge Villaseñor-Becerra & Martín Romero-Morett, 2016. "NAFTA trade (and some extra NAFTA trade) in value added and its distribution, 1995–2011," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-22, December.
    20. Federico Frattini & Francesco Nicolli & Giorgio Prodi, 2014. "Technological capabilities and growth: A study of economic convergence among Chinese prefectures," SEEDS Working Papers 2914, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Dec 2014.
    21. Gerardo Fujii-Gambero & Manuel García-Ramos, 2015. "Revisiting the quality of exports," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-17, December.
    22. Yuqing Xing & Manisha Pradhananga, 2013. "How Important is Exports and FDI for China's Economic Growth?," GRIPS Discussion Papers 13-04, National Graduate Institute for Policy Studies.
    23. Jose-Miguel Albala-Bertrand, 2016. "Industrial Interdependence: China 1995-2010," Working Papers 802, Queen Mary University of London, School of Economics and Finance.
    24. Peltonen, Tuomas & Pula, Gabor, 2009. "Has emerging Asia decoupled? An analysis of production and trade linkages using the Asian international input-output table," Working Paper Series 993, European Central Bank.
    25. 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 427, Asian Development Bank Institute.

    More about this item

    Keywords

    Export-led growth Export dependency Input-output analysis Malmquist index;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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