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China's Trade Imbalances: The Role of FDI

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  • Yongqing Wang
  • Guanghua Wan

Abstract

China has been running a large trade surplus with the rest of the world, particularly with the USA and EU. This has caused considerable diplomatic tensions and tremendous pressure on the Chinese currency. Existing analytical studies, however, mostly focus on real exchange rate and income as determinants of China's trade imbalances. Little attention has been given to the role of inflow and outflow of foreign direct investment (FDI). The purpose of this paper is to fill in this gap in the literature by adding FDI to China's trade balance model.

Suggested Citation

  • Yongqing Wang & Guanghua Wan, 2008. "China's Trade Imbalances: The Role of FDI," WIDER Working Paper Series RP2008-103, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:rp2008-103
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    File URL: https://www.wider.unu.edu/sites/default/files/rp2008-103.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ben Slimane, Mehdi & Huchet-Bourdon, Marilyne & Zitouna, Habib, 2016. "Do FDI inflows and energy price affect the food import dependency in developing countries? Evidence from panel VAR Models," Working Papers 234643, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    2. Biswajit Banerjee & Haiyan Shi & Jan Radovan & Yingying Sheng & Xin Li, 2017. "The Impact of the Exchange Rate and Trade Composition on China’s Trade Balance Vis-à-Vis Selected Partner Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(3), pages 311-344, September.

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