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Investment-Led Growth in China; Global Spillovers


  • Ashvin Ahuja
  • Malhar S Nabar


Over the past decade, China’s growth model has become more reliant on investment and its footprint in global imports has widened substantially. Several economies within China’s supply chain are increasingly exposed to its investment-led growth and face growing risks from a deceleration in investment in China. This note quantifies potential global spillovers from an investment slowdown in China. It finds that a one percentage point slowdown in investment in China is associated with a reduction of global growth of just under one-tenth of a percentage point. The impact is about five times larger than in 2002. Regional supply chain economies and commodity exporters with relatively less diversified economies are most vulnerable to an investment slowdown in China. The spillover effects also register strongly across a range of macroeconomic, trade, and financial variables among G20 trading partners.

Suggested Citation

  • Ashvin Ahuja & Malhar S Nabar, 2012. "Investment-Led Growth in China; Global Spillovers," IMF Working Papers 12/267, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:12/267

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    References listed on IDEAS

    1. Jean Boivin & Marc P. Giannoni, 2007. "Global Forces and Monetary Policy Effectiveness," NBER Chapters,in: International Dimensions of Monetary Policy, pages 429-478 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Menzie Chinn, 2014. "Global supply chains and macroeconomic relationships in Asia," Chapters,in: Asia and Global Production Networks, chapter 8, pages 249-286 Edward Elgar Publishing.
    2. Cashin, Paul & Mohaddes, Kamiar & Raissi, Mehdi, 2017. "China's slowdown and global financial market volatility: Is world growth losing out?," Emerging Markets Review, Elsevier, vol. 31(C), pages 164-175.
    3. Allan Dizioli & Benjamin L Hunt & Wojciech Maliszewski, 2016. "Spillovers from the Maturing of China’s Economy," IMF Working Papers 16/212, International Monetary Fund.
    4. Rui Mano, 2016. "Quantifying the Spillovers from China Rebalancing Using a Multi-Sector Ricardian Trade Model," IMF Working Papers 16/219, International Monetary Fund.
    5. Metelli, Luca & Natoli, Filippo, 2017. "The effect of a Chinese slowdown on inflation in the euro area and the United States," Economic Modelling, Elsevier, vol. 62(C), pages 16-22.
    6. Kose,Ayhan & Ohnsorge,Franziska Lieselotte & Ye,Lei Sandy & Islamaj,Ergys, 2017. "Weakness in investment growth : causes, implications and policy responses," Policy Research Working Paper Series 7990, The World Bank.
    7. Hansen, Erwin & Wagner, Rodrigo, 2017. "Stockpiling cash when it takes time to build: Exploring price differentials in a commodity boom," Journal of Banking & Finance, Elsevier, vol. 77(C), pages 197-212.
    8. Gauvin, Ludovic & Rebillard, Cyril, 2013. "Towards Recoupling? Assessing the Impact of a Chinese Hard Landing on Commodity Exporters: Results from Conditional Forecast in a GVAR Model," MPRA Paper 65457, University Library of Munich, Germany.
    9. M. Albert & C. Jude & C. Rebillard, 2015. "The Long Landing Scenario: Rebalancing from Overinvestment and Excessive Credit Growth. Implications for Potential Growth in China," Working papers 572, Banque de France.
    10. Allan Dizioli & Jaime Guajardo & Vladimir Klyuev & Rui Mano & Mehdi Raissi, 2016. "Spillovers from China’s Growth Slowdown and Rebalancing to the ASEAN-5 Economies," IMF Working Papers 16/170, International Monetary Fund.
    11. Paulo Drummond & Estelle Liu, 2015. "Africa’s Rising Exposure to China: How Large Are Spillovers Through Trade?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 317-334, August.
    12. Vianna, Andre C., 2016. "The impact of exports to China on Latin American growth," Journal of Asian Economics, Elsevier, vol. 47(C), pages 58-66.
    13. Carlos Casanova & Alvaro Ortiz & Tomasa Rodrigo & Le Xia & Joaquín Iglesias, 2017. "Tracking chinese vulnerability in real time using Big Data," Working Papers 17/13, BBVA Bank, Economic Research Department.
    14. Antoniades, Andreas, 2015. "The New Resilience of Emerging and Developing Countries: Systemic Interlocking, Currency Swaps and Geoeconomics," MPRA Paper 68181, University Library of Munich, Germany.
    15. Andersen, Thomas Barnebeck & Barslund, Mikkel & Hansen, Casper Worm & Harr, Thomas & Jensen, Peter Sandholt, 2014. "How much did China's WTO accession increase economic growth in resource-rich countries?," China Economic Review, Elsevier, vol. 30(C), pages 16-26.
    16. Constanta Aurelia Chitiba & Anca Costea-Dunarintu, 2014. "Current Developments in the Global Economy," Knowledge Horizons - Economics, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(2), pages 68-73, June.
    17. Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung (ed.), 2016. "Zeit für Reformen. Jahresgutachten 2016/17," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201617.
    18. World Bank Group, 2017. "Global Economic Prospects, January 2017," World Bank Publications, The World Bank, number 25823, June.
    19. repec:wbk:wbpubs:28422 is not listed on IDEAS
    20. repec:kap:iaecre:v:21:y:2015:i:3:p:317-334 is not listed on IDEAS


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