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China and India in World Trade: Are the Asia Giants a Threat to Malaysia?


  • Evelyn Devadason


With higher shares in world merchandise trade and improvements in product quality, China is better positioned than India in the near term for influencing global trade. From the Malaysian perspective, China represents a non-negligible share in Malaysia's trade. The trends in bilateral trade with both Giants however suggest that competition has intensified. Relative to India, China appears to promulgate a more influential role on Malaysia via higher commodity overlap in external markets, greater matched trade that is of vertical differentiation, distinct quality shifts and negative adjustment pressures. Within this broad rubric of trade-induced changes, there is no evidence of skill upgrading for Malaysia in trade expansion with both Giants. This mirrors the lack of product quality improvements and the low levels of export values of high quality varieties in matched trade. Hence trade induced changes from the Giants that have been cited to be favourable from the Malaysian perspective in previous studies, may have been grossly overstated.

Suggested Citation

  • Evelyn Devadason, 2008. "China and India in World Trade: Are the Asia Giants a Threat to Malaysia?," Global Economic Review, Taylor & Francis Journals, vol. 37(4), pages 447-467.
  • Handle: RePEc:taf:glecrv:v:37:y:2008:i:4:p:447-467
    DOI: 10.1080/12265080802480936

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    References listed on IDEAS

    1. Lee Branstetter & Nicholas Lardy, 2006. "China's Embrace of Globalisation," Working Papers id:640, eSocialSciences.
    2. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    3. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Investment, Outsourcing and Relative Wages," NBER Working Papers 5121, National Bureau of Economic Research, Inc.
    4. Lee Branstetter & Nicholas Lardy, 2006. "China's Embrace of Globalization," NBER Working Papers 12373, National Bureau of Economic Research, Inc.
    5. Dani Rodrik, 2006. "What's So Special about China's Exports?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(5), pages 1-19.
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