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The Shifting Structure of China’s Trade and Production

Author

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  • Li Cui
  • Murtaza H Syed

Abstract

This paper uses disaggregated trade data to assess how the expansion of China's production capacity and its changing production structure may be affecting its trade linkages with other countries. It finds that China is moving away from traditional assembly operations in its processing activities and its exports have started to rely more on domestically sourced components. In turn, China's imports and exports have begun to delink, with increased domestic sourcing contributing to the recent increase in its trade balance. In addition, as China moves up the value chain, both its imports and exports have become more sophisticated than in the past. As a result of these shifts, China may be becoming more exposed to fluctuations in the strength of the global economy, and changes in its exchange rate could have a bigger impact on the trade balance and the domestic economy than commonly believed.

Suggested Citation

  • Li Cui & Murtaza H Syed, 2007. "The Shifting Structure of China’s Trade and Production," IMF Working Papers 07/214, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:07/214
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    References listed on IDEAS

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    1. Cerra, Valerie & Saxena, Sweta Chaman, 2003. "How responsive is Chinese export supply to market signals?," China Economic Review, Elsevier, vol. 14(3), pages 350-370.
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    3. Hiratsuka, Daisuke, 2005. "The "Catching up" Process of Manufacturing in East Asia," IDE Discussion Papers 22, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Peter K. Schott, 2004. "Across-Product Versus Within-Product Specialization in International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 647-678.
    5. Françoise Lemoine & Deniz Ünal-Kesenci, 2002. "China in the International Segmentation of Production Processes," Working Papers 2002-02, CEPII research center.
    6. Coudert, Virginie & Couharde, Cecile, 2007. "Real equilibrium exchange rate in China is the renminbi undervalued?," Journal of Asian Economics, Elsevier, vol. 18(4), pages 568-594, August.
    7. Virginie Coudert & Cécile Couharde, 2005. "Real Equilibrium Exchange Rate in China," Working Papers 2005-01, CEPII research center.
    8. Peter K. Schott, 2008. "The relative sophistication of Chinese exports," Economic Policy, CEPR;CES;MSH, vol. 23, pages 5-49, January.
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    Citations

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    Cited by:

    1. Mehrotra, Aaron & Nuutilainen, Riikka & Pääkkönen, Jenni, 2011. "Changing economic structures and impacts of shocks : evidence from a DSGE for China," BOFIT Discussion Papers 5/2011, Bank of Finland, Institute for Economies in Transition.
    2. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    3. Ibarra, Carlos A., 2011. "Import elasticities and the external constraint in Mexico," Economic Systems, Elsevier, vol. 35(3), pages 363-377, September.
    4. Françoise Nicolas, 2008. "The political economy of regional integration in East Asia," Economic Change and Restructuring, Springer, vol. 41(4), pages 345-367, December.
    5. repec:wsi:serxxx:v:55:y:2010:i:01:n:s0217590810003584 is not listed on IDEAS
    6. Peltonen, Tuomas & Pula, Gabor, 2009. "Has emerging Asia decoupled? An analysis of production and trade linkages using the Asian international input-output table," Working Paper Series 993, European Central Bank.
    7. AkIn, Cigdem & Kose, M. Ayhan, 2008. "Changing nature of North-South linkages: Stylized facts and explanations," Journal of Asian Economics, Elsevier, vol. 19(1), pages 1-28, February.
    8. Jianhong Zhang & Chaohong Zhou & Arjen van Witteloostuijn & Haico Ebbers, 2013. "What does the Chinese market need? An empirical study of the determinants of Chinese imports, 1996--2008," Asia Pacific Business Review, Taylor & Francis Journals, vol. 19(3), pages 402-420, July.
    9. Chen, Changsheng & Girardin, Eric & Mehrotra, Aaron, 2017. "Global slack and open economy Phillips curves – A province-level view from China," China Economic Review, Elsevier, vol. 42(C), pages 74-87.
    10. Jianhong Zhang & Haico Ebbers & Arjen van Witteloostuijn, 2013. "Dynamics of the global competitiveness of Chinese industries," Post-Communist Economies, Taylor & Francis Journals, vol. 25(4), pages 492-511, December.

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