1. China's Role as a Trade Bridge for Expanding Regional and World Trade
- Author:
- Min Gong and Wenpu Li
- Publication Date:
- 10-2008
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- To understand China's trade relations with the US, Japan, and South Korea, we estimate a vector autoregressive model (VAR) model to investigate the trade interactions among these four countries using data from the period of the first quarter of 1993 to the fourth quarter of 2005. We find substantial Foreign Direct Investment (FDI)-induced indirect trade from Japan and Korea to the US through China, and between Japan and Korea through China. These indirect trade flows lead to increases in China's trade deficit with Japan and Korea as well as China's trade surplus with the US. The indirect trade flows through China also indicate the importance of China's role as a trade bridge. From the viewpoint of world trade growth, as a trade bridge, China contributes to the stable growth of the regional and world economies. However, China's role as a trade bridge may negatively affect its long-run economic growth.
- Topic:
- Globalization, International Political Economy, and International Trade and Finance
- Political Geography:
- United States, Japan, China, Asia, South Korea, and Korea