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How Dependent is the Chinese Economy on Exports and in What Sense has its Growth been Export-led?

  • Dong He

    (Research Department, Hong Kong Monetary Authority)

  • Wenlang Zhang

    (Research Department, Hong Kong Monetary Authority)

Registered author(s):

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 different 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 commonly thought. 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.

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File URL: http://www.info.gov.hk/hkma/eng/research/working/pdf/HKMAWP08_14_full.pdf
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Paper provided by Hong Kong Monetary Authority in its series Working Papers with number 0814.

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Length: 36 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:hkg:wpaper:0814
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  1. Grossman, Gene M. & Helpman, Elhanan, 1991. "Trade, knowledge spillovers, and growth," European Economic Review, Elsevier, vol. 35(2-3), pages 517-526, April.
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  3. Steven Barnett & Ray Brooks, 2006. "What's Driving Investment in China?," IMF Working Papers 06/265, International Monetary Fund.
  4. Matthews, Kent & Guo, Jianguang & Zhang, Nina, 2007. "Non-Performing Loans and Productivity in Chinese Banks: 1997-2006," Cardiff Economics Working Papers E2008/17, Cardiff University, Cardiff Business School, Economics Section, revised Aug 2008.
  5. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
  6. Xiaolan Fu, 2004. "Exports, Technical Progress and Productivity Growth in Chinese Manufacturing Industries," ESRC Centre for Business Research - Working Papers wp278, ESRC Centre for Business Research.
  7. Robert C. Feenstra & Chang Hong, 2007. "China's Exports and Employment," NBER Working Papers 13552, National Bureau of Economic Research, Inc.
  8. Dong He & Lillian Cheung & Jian Chang, 2007. "Sense and Nonsense on Asia's Export Dependency and The Decoupling Thesis," Working Papers 0703, Hong Kong Monetary Authority.
  9. Dong He & Wenlang Zhang & Jimmy Shek, 2007. "How Efficient Has Been China'S Investment? Empirical Evidence From National And Provincial Data," Pacific Economic Review, Wiley Blackwell, vol. 12(5), pages 597-617, December.
  10. Panagariya, Arvind, 1991. "Unraveling the mysteries of China's foreign trade regime : a view from Jiangsu Province," Policy Research Working Paper Series 801, The World Bank.
  11. 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.
  12. Kui-Wai Li, 2003. "China's Capital and Productivity Measurement Using Financial Resources," Working Papers 851, Economic Growth Center, Yale University.
  13. Venet, Baptiste & Hurlin, Christophe, 2001. "Granger Causality Tests in Panel Data Models with Fixed Coefficients," Economics Papers from University Paris Dauphine 123456789/6159, Paris Dauphine University.
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