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Trade expansion and employment generation: how mercantilist does China have to be?

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  • Xiao Jiang

Abstract

We conduct an input--output analysis of China's employment changes due to changes in trade structure on a sectoral level. We find that between 2002 and 2007 China generated about 71 million jobs due to trade expansion. We also estimate the additional amount of trade that would be needed if China were using its trade surplus as the main tool to absorb its excess labour. Given the magnitude of this estimated amount, we conclude that this 'mercantilist' approach to excess labour absorption is not feasible. Finally, using Spearman rank correlation analysis, we find that the ranking of China's sectors' employment generation capacities is inversely related to the ranking of these sectors' trade performances. This suggests that the 'mercantilist' approach to excess labour absorption is not only infeasible but also inefficient. We end the paper by suggesting a more balanced growth path for China.

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  • Xiao Jiang, 2013. "Trade expansion and employment generation: how mercantilist does China have to be?," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(4), pages 557-573, July.
    • Handle: RePEc:taf:irapec:v:27:y:2013:i:4:p:557-573
    DOI: 10.1080/02692171.2012.760068
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    Cited by:

    1. David Kucera & Xiao Jiang, 2018. "China and the great trade collapse: employment effects of falling exports to the EU and US," International Economics and Economic Policy, Springer, vol. 15(3), pages 629-659, July.

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