IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v23y2012i3p566-579.html
   My bibliography  Save this article

Understanding China's demand for resource imports

Author

Listed:
  • Roberts, Ivan
  • Rush, Anthony

Abstract

Is China's demand for resources driven predominantly by domestic factors or by global demand for its exports? The answer to this question is of interest given the highly resource-intensive nature of China's growth, and is important for many resource-exporting countries, such as Australia, Brazil, Canada and India. This paper provides evidence that China's (mainly manufacturing) exports have been a significant driver of its demand for resource commodities over recent decades. First, it employs input–output tables to demonstrate that, historically, manufacturing has been at least as important as construction as a driver of China's demand for resource-intensive metal products. Second, it shows that global trade in non-oil resource commodities can be described by the gravity model of trade. Using this model it is found that, controlling for other determinants of resource trade, exports (and the manufacturing sector more generally) are a sizeable and significant determinant of a country's resource imports, and that this has been true for China as well as for other countries.

Suggested Citation

  • Roberts, Ivan & Rush, Anthony, 2012. "Understanding China's demand for resource imports," China Economic Review, Elsevier, vol. 23(3), pages 566-579.
    • Handle: RePEc:eee:chieco:v:23:y:2012:i:3:p:566-579
    DOI: 10.1016/j.chieco.2011.05.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X11000459
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2011.05.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ross Garnaut, 2006. "Rapid industrialization and market for energy and minerals: China in the East Asian context," Psychometrika, Springer;The Psychometric Society, vol. 1(3), pages 373-394, September.
    2. repec:zbw:bofitp:2008_031 is not listed on IDEAS
    3. Mr. Steven A Barnett & Mr. R. Brooks, 2006. "What’s Driving Investment in China?," IMF Working Papers 2006/265, International Monetary Fund.
    4. David Greenaway & Aruneema Mahabir & Chris Milner, 2010. "Has China Displaced Other Asian Countries’ Exports?," Palgrave Macmillan Books, in: David Greenaway & Chris Milner & Shujie Yao (ed.), China and the World Economy, chapter 4, pages 60-90, Palgrave Macmillan.
    5. Bruce A. Blonigen & Alyson C. Ma, 2019. "Please Pass the Catch-Up: The Relative Performance of Chinese and Foreign Firms in Chinese Exports," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 12, pages 401-445, World Scientific Publishing Co. Pte. Ltd..
    6. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(3), pages 597-625, June.
    7. Zhao, Xingjun & Wu, Yanrui, 2007. "Determinants of China's energy imports: An empirical analysis," Energy Policy, Elsevier, vol. 35(8), pages 4235-4246, August.
    8. Peter Drysdale & Kejun Jiang & Dominic Meagher, 2007. "China and East Asian Energy: Prospects and Issues," Asia Pacific Economic Papers 361, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    9. I-Hui Cheng & Howard J. Wall, 2005. "Controlling for heterogeneity in gravity models of trade and integration," Review, Federal Reserve Bank of St. Louis, vol. 87(Jan), pages 49-63.
    10. Ivan Roberts & Anthony Rush, 2010. "Sources of Chinese Demand for Resource Commodities," RBA Research Discussion Papers rdp2010-08, Reserve Bank of Australia.
    11. Crompton, Paul & Wu, Yanrui, 2005. "Energy consumption in China: past trends and future directions," Energy Economics, Elsevier, vol. 27(1), pages 195-208, January.
    12. 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.
    13. Prema‐chandra Athukorala, 2009. "The Rise of China and East Asian Export Performance: Is the Crowding‐Out Fear Warranted?," The World Economy, Wiley Blackwell, vol. 32(2), pages 234-266, February.
    14. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    15. Matthieu Bussière & Bernd Schnatz, 2009. "Evaluating China’s Integration in World Trade with a Gravity Model Based Benchmark," Open Economies Review, Springer, vol. 20(1), pages 85-111, February.
    16. Yongsheng Zhang & Chaoyu Zheng, 2008. "The Implications Of China'S Rapid Growth On Demand For Energy And Mining Products Imported From Australia," Economic Papers, The Economic Society of Australia, vol. 27(1), pages 95-106, March.
    17. Zhiwei Zhang, 2008. "Can Demand from China Shield East Asian Economies from Global Slowdown?," Working Papers 0819, Hong Kong Monetary Authority.
    18. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 653-670, November.
    19. Tcha, MoonJoong & Wright, Damione, 1999. "Determinants of China's import demand for Australia's iron ore," Resources Policy, Elsevier, vol. 25(3), pages 143-149, September.
    20. 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.
    21. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    22. Gutierrez, Luciano, 2003. "On the power of panel cointegration tests: a Monte Carlo comparison," Economics Letters, Elsevier, vol. 80(1), pages 105-111, July.
    23. Kahrl, Fredrich & Roland-Holst, David, 2008. "Energy and exports in China," China Economic Review, Elsevier, vol. 19(4), pages 649-658, December.
    24. Barry Eichengreen & Yeongseop Rhee & Hui Tong, 2007. "China and the Exports of Other Asian Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(2), pages 201-226, July.
    25. Klein, Michael W. & Shambaugh, Jay C., 2006. "Fixed exchange rates and trade," Journal of International Economics, Elsevier, vol. 70(2), pages 359-383, December.
    26. Yu Sheng & Ligang Song, 2008. "Comparative Advantage And Australia-China Bilateral Trade," Economic Papers, The Economic Society of Australia, vol. 27(1), pages 41-56, March.
    27. Pedroni, Peter, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    28. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    29. Edmonds, Christopher & La Croix, Sumner & Li, Yao, 2008. "China trade: Busting gravity's bounds," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 455-466.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Charlier, Christophe & Guillou, Sarah, 2014. "Distortion effects of export quota policy: an analysis of the China-Raw Materials dispute," China Economic Review, Elsevier, vol. 31(C), pages 320-338.
    2. repec:hal:spmain:info:hdl:2441/f6h8764enu2lskk9p504jih2g is not listed on IDEAS
    3. Adewuyi, Adeolu O., 2016. "Determinants of import demand for non-renewable energy (petroleum) products: Empirical evidence from Nigeria," Energy Policy, Elsevier, vol. 95(C), pages 73-93.
    4. Mayer, Andreas & Haas, Willi & Wiedenhofer, Dominik, 2017. "How Countries' Resource Use History Matters for Human Well-being – An Investigation of Global Patterns in Cumulative Material Flows from 1950 to 2010," Ecological Economics, Elsevier, vol. 134(C), pages 1-10.
    5. Huang, Jian-Bai & Chen, Xi & Song, Yi, 2020. "What drives embodied metal consumption in China's imports and exports," Resources Policy, Elsevier, vol. 69(C).
    6. Fedoseeva, Svetlana & Zeidan, Rodrigo, 2018. "How (a)symmetric is the response of import demand to changes in its determinants? Evidence from European energy imports," Energy Economics, Elsevier, vol. 69(C), pages 379-394.
    7. Yang, Shanping & Martinez-Zarzoso, Inmaculada, 2014. "A panel data analysis of trade creation and trade diversion effects: The case of ASEAN–China Free Trade Area," China Economic Review, Elsevier, vol. 29(C), pages 138-151.
    8. Sun, Changyou, 2017. "Competition of wood products with different fiber transformation and import sources," Forest Policy and Economics, Elsevier, vol. 74(C), pages 30-39.
    9. Andersen, Thomas Barnebeck & Barslund, Mikkel & Hansen, Casper Worm & Harr, Thomas & Jensen, Peter Sandholt, 2014. "How much did China's WTO accession increase economic growth in resource-rich countries?," China Economic Review, Elsevier, vol. 30(C), pages 16-26.
    10. Sun, Changyou, 2014. "Recent growth in China's roundwood import and its global implications," Forest Policy and Economics, Elsevier, vol. 39(C), pages 43-53.
    11. Li Xie & Wing Thye Woo & Zhichao Zhang & Zhuang Zhang, 2015. "A Multiple-Goal Investment Strategy for Sovereign Wealth Funds: An Application to China," Asian Economic Papers, MIT Press, vol. 14(1), pages 78-97, Winter/Sp.
    12. Hao Wei, 2016. "Measuring the Technological Structure of Chinese Imports," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 261-271, February.
    13. Allen, Creina & Day, Garth, 2014. "Depletion of non-renewable resources imported by China," China Economic Review, Elsevier, vol. 30(C), pages 235-243.
    14. Tamaki, Tetsuya & Shin, Kong Joo & Nakamura, Hiroki & Fujii, Hidemichi & Managi, Shunsuke, 2018. "Shadow prices and production inefficiency of mineral resources," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 111-121.
    15. Zhang, Hai-Ying & Ji, Qiang & Fan, Ying, 2015. "What drives the formation of global oil trade patterns?," Energy Economics, Elsevier, vol. 49(C), pages 639-648.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ivan Roberts & Anthony Rush, 2010. "Sources of Chinese Demand for Resource Commodities," RBA Research Discussion Papers rdp2010-08, Reserve Bank of Australia.
    2. Betty C. Daniel & Christos Shiamptanis, 2008. "Fiscal policy in the European Monetary Union," International Finance Discussion Papers 961, Board of Governors of the Federal Reserve System (U.S.).
    3. Alessio Ciarlone, 2019. "The relationship between financial development and growth: the case of emerging Europe," Questioni di Economia e Finanza (Occasional Papers) 521, Bank of Italy, Economic Research and International Relations Area.
    4. Martin Wagner & Jaroslava Hlouskova, 2004. "What's Really the Story with this Balassa-Samuelson Effect in the CEECs?," Diskussionsschriften dp0416, Universitaet Bern, Departement Volkswirtschaft.
    5. Baiardi, Donatella & Bianchi, Carluccio, 2019. "At the roots of China's striking performance in textile exports: A comparison with its main Asian competitors," China Economic Review, Elsevier, vol. 54(C), pages 367-389.
    6. Lena Dr䧥r & Jan-Oliver Menz & Ulrich Fritsche, 2014. "Perceived inflation under loss aversion," Applied Economics, Taylor & Francis Journals, vol. 46(3), pages 282-293, January.
    7. Swamy, Vighneswara & Dharani, M. & Takeda, Fumiko, 2019. "Investor attention and Google Search Volume Index: Evidence from an emerging market using quantile regression analysis," Research in International Business and Finance, Elsevier, vol. 50(C), pages 1-17.
    8. Frenkel Michael & Koske Isabell, 2012. "Are the Real Exchange Rates of the New EU Member Countries in Line with Fundamentals? – Implications of the NATREX Approach," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(2), pages 129-145, April.
    9. Olivier Damette & Philippe Frouté, 2010. "Is the crisis treatment exacerbating cautiousness or risk-taking? [Le traitement de la crise génère-t-il de la prudence ou de la prise de risque ?]," Post-Print hal-02336674, HAL.
    10. Liu, Jingyang & Kool, Clemens J.M., 2018. "Money and credit overhang in the euro area," Economic Modelling, Elsevier, vol. 68(C), pages 622-633.
    11. Ruhul Salim & Kamrul Hassan, 2009. "Does the relative population growth affect purchasing power parity?," Applied Economics Letters, Taylor & Francis Journals, vol. 16(1), pages 103-107.
    12. Julián Ramajo Hernández(1) & Montserrat Ferré Carracedo(2), "undated". "Testing For Long-Run Purchasing Power Parity In The Post Bretton Woods Era: Evidence From Old And New Tests," Working Papers 24-05 Classification-JEL , Instituto de Estudios Fiscales.
    13. Narayan, Seema & Nguyen, Tri Tung, 2016. "Does the trade gravity model depend on trading partners? Some evidence from Vietnam and her 54 trading partners," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 220-237.
    14. Zheng, Wei & Walsh, Patrick Paul, 2019. "Economic growth, urbanization and energy consumption — A provincial level analysis of China," Energy Economics, Elsevier, vol. 80(C), pages 153-162.
    15. Giorgia Marini, 2016. "A note on the power of panel cointegration tests – An application to health care expenditure and gdp," Public Finance Research Papers 21, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    16. Neil A. Wilmot & Ariuna Taivan, 2021. "Examining the Impact of Financial Development on Energy Production in Emerging Economies," JRFM, MDPI, vol. 14(2), pages 1-17, February.
    17. Bernstein, Ronald & Madlener, Reinhard, 2011. "Responsiveness of Residential Electricity Demand in OECD Countries: A Panel Cointegation and Causality Analysis," FCN Working Papers 8/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    18. Hosan, Shahadat & Rahman, Md Matiar & Karmaker, Shamal Chandra & Saha, Bidyut Baran, 2023. "Energy subsidies and energy technology innovation: Policies for polygeneration systems diffusion," Energy, Elsevier, vol. 267(C).
    19. Valérie Mignon & Christophe Hurlin, 2007. "Une synthèse des tests de cointégration sur données de panel," Économie et Prévision, Programme National Persée, vol. 180(4), pages 241-265.
    20. George Halkos & Iacovos Psarianos, 2016. "Exploring the effect of including the environment in the neoclassical growth model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(3), pages 339-358, July.

    More about this item

    Keywords

    China; Trade; Investment; Resource commodities; Gravity model;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:23:y:2012:i:3:p:566-579. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.