Are Chinese trade flows different?

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

21 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)2127-2146
Journal / PublicationJournal of International Money and Finance
Volume31
Issue number8
StatePublished - 2012

Abstract

We find that Chinese trade flows respond to economic activity and relative prices - as represented by a trade weighted exchange rate - but the relationships are not always precisely or robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and decreasing as the Chinese renminbi (RMB) appreciates. However, the estimated income elasticity is sensitive to the treatment of time trends. Estimates of aggregate imports are more problematic. In many cases, Chinese aggregate imports actually rise in response to an RMB depreciation and decline with Chinese GDP. This is true even after accounting for the fact a substantial share of imports are subsequently incorporated into Chinese exports. We find that some of these counter-intuitive results are mitigated when we disaggregate the trade flows by customs type, commodity type, and the type of firm undertaking the transactions. However, for imports, we only obtain more reasonable estimates of elasticities when we allow for different import intensities for different components of aggregate demand (specifically, consumption vs. investment) or when we include a relative productivity variable. © 2012 Elsevier Ltd.

Research Area(s)

  • Dis-aggregate trade flow, Manufactures vs. primary products, Ownership structure, Processing vs. ordinary trade, Renminbi exchange rate

Citation Format(s)

Are Chinese trade flows different? / Cheung, Yin-Wong; Chinn, Menzie D.; Qian, XingWang.

In: Journal of International Money and Finance, Vol. 31, No. 8, 2012, p. 2127-2146.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review