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A China Round of Multilateral Trade Negotiations

Author

Listed:
  • Aaditya Mattoo

    () (Word Bank)

  • Prachi Mishra

    () (International Monetary Fund)

  • Arvind Subramanian

    () (Peterson Institute for International Economics)

Abstract

This paper estimates the impact of China’s exchange rate changes on exports of competitor countries in third markets, known as the “spillover effect.” Recent theory is used to develop an identification strategy in which competition between China and its developing country competitors in specific products and destinations plays a key role. The variation is used—afforded by disaggregated trade data—across exporters, importers, product, and time to estimate this spillover effect. The results show robust evidence of a statistically and quantitatively significant spillover effect. Estimates suggest that, on average, a 10 percent appreciation of China’s real exchange rate boosts a developing country’s exports of a typical 4-digit Harmonized System (HS) product category to third markets by about 1.5 to 2 percent. The magnitude of the spillover effect varies systematically with product characteristics as implied by theory.

Suggested Citation

  • Aaditya Mattoo & Prachi Mishra & Arvind Subramanian, 2012. "A China Round of Multilateral Trade Negotiations," Working Paper Series WP12-4, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp12-4
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Jean-Christophe Bureau & Sébastien Jean, 2013. "International Agricultural Trade and Negotiations : Coping with a New Landscape
      [Commerce et négociations agricoles commerciales: s'ajuster au nouvel environnement]
      ," Working Papers hal-01592099, HAL.
    2. Arvind Subramanian, 2013. "Preserving the Open Global Economic System: A Strategic Blueprint for China and the United States," Policy Briefs PB13-16, Peterson Institute for International Economics.
    3. Robert Wolfe, 2013. "First diagnose, then treat: what ails the Doha Round?," RSCAS Working Papers 2013/85, European University Institute.

    More about this item

    Keywords

    exchange rates; exports; China; spillover;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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