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China's Impact on Foreign Trade and Investment in other Asian Countries


  • Prema-chandra Athukorala



This paper examines how China’s emergence as a major player in the global economy is affecting export performance of and FDI flows to its East Asian neighbours against the backdrop of the ongoing process of global production sharing. The findings indicate that the 'China threat’ has been vastly exaggerated in the contemporary policy debate. China’s rapid market penetration in traditional labour intensive manufactured goods has occurred mostly at the expense of the high-wage East Asian countries, without crowding out export opportunities of low-wage countries in the region. More importantly, China’s emergence as a major assembly centre within global production networks has created new opportunities for the other East Asian countries to engage in various segments of the production chian in line with their comparative advantage in international production. FDI flows to the other Asian countries seem to be stimulated, rather than crowded out by FDI flows to China.

Suggested Citation

  • Prema-chandra Athukorala, 2009. "China's Impact on Foreign Trade and Investment in other Asian Countries," Departmental Working Papers 2009-04, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2009-04

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    China; East Asia; exports; global production sharing;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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