IDEAS home Printed from https://ideas.repec.org/a/eee/dyncon/v186y2026ics016518892600045x.html

From trade reform to trade war: a quantitative analysis of China’s current account

Author

Listed:
  • Tang, Junjie
  • Liu, Qing
  • Shi, Kang
  • Xu, Juanyi

Abstract

This paper quantifies the macroeconomic effects of two pivotal trade events: China’s post-WTO accession liberalization and the recent U.S.-China trade war, which can be viewed as a reversal of the former. We develop a two-country general equilibrium model, disciplined by disaggregated firm-level data, to account for the persistent effects of China’s early-2000s trade reform. Our analysis reveals that the delayed and hump-shaped trajectory of China’s current account between 2001 and 2010 is largely attributable to the asymmetric nature of its liberalization. We find that the reform increased social welfare by 16.4% in China and 2.7% in the rest of the world. Finally, we employ our quantitative framework to simulate the recent U.S.-China trade conflict, quantifying the impacts of both tariff increases and a broader rise in trade costs.

Suggested Citation

  • Tang, Junjie & Liu, Qing & Shi, Kang & Xu, Juanyi, 2026. "From trade reform to trade war: a quantitative analysis of China’s current account," Journal of Economic Dynamics and Control, Elsevier, vol. 186(C).
    • Handle: RePEc:eee:dyncon:v:186:y:2026:i:c:s016518892600045x
    DOI: 10.1016/j.jedc.2026.105299
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S016518892600045X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jedc.2026.105299?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

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

    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:dyncon:v:186:y:2026:i:c:s016518892600045x. 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.

    We have no bibliographic references for this item. You can help adding them by using 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/jedc .

    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.