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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page China and Emerging Asia: Comrades or Competitors?
Alan G. Ahearne; John G. Fernald; Prakash Loungani; John W. Schindler
2003-789  (December)

Abstract:  Do increases in China's exports reduce exports of other emerging Asian economies? We find that correlations between Chinese export growth and that of other emerging Asian economies are actually positive (though usually not significant), even after controlling for trading-partner income growth and real effective exchange rates. We also present results from a VAR estimation of aggregate trade equations on the relative importance of foreign income and exchange rates in determining Asian export growth. Although exchange rates do matter for export performance, the income growth of trading partners matters even more. In addition, we examine specific products and find evidence that a considerable shifting of trade patterns is taking place, consistent with a 'flying geese' pattern in which China and ASEAN-4 move into the product space vacated by the NIEs. Our results suggest that China and emerging Asia are both comrades (overall) and competitors (in specific products).

Full paper (296 KB PDF)

exports, trade links, exchange rates, trade equations, flying geese

As Published Elsewhere
Seoul Journal of Economics

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