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When China Sneezes, Asia Catches a Cold: the Effects of China's Export Decline in the Realm of the Global Economic Crisis

Author

Listed:
  • Ari Van Assche
  • Alyson C. Ma
Abstract
In this discussion report, we dispel the widely held misconception that China's economy is excessively export-dependent and therefore particularly vulnerable to a drop in export demand. In the past two decades, China's dramatic exports rise has largely been driven by the fact that many foreign firms have offshored a slice of their value chain labor-intensive final assembly to China for export purposes. Many of these assembly plants heavily rely on imported inputs from East Asian economies to produce their export products. Because of this feature, China passes on a large portion of its negative export demand shocks to the East Asian economies by reducing demand for their imported inputs. Using recent trade data, we provide evidence of this business cycle pass-through during the current economic crisis.

Suggested Citation

  • Ari Van Assche & Alyson C. Ma, 2009. "When China Sneezes, Asia Catches a Cold: the Effects of China's Export Decline in the Realm of the Global Economic Crisis," CIRANO For discussion... 2009dt-01, CIRANO.
    • Handle: RePEc:cir:cirtra:2009dt-01
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    File URL: https://cirano.qc.ca/files/publications/2009DT-01.pdf
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    References listed on IDEAS

    as
    1. He, Dong & Zhang, Wenlang, 2010. "How dependent is the Chinese economy on exports and in what sense has its growth been export-led?," Journal of Asian Economics, Elsevier, vol. 21(1), pages 87-104, February.
    2. Ari Van Assche, 2009. "Are We Making a Dragon Out of a Dragonfly? Understanding China's Role in Global Production Networks," CIRANO Burgundy Reports 2009rb-03, CIRANO.
    3. Ari Van Assche, 2009. "ARE WE MAKING A DRAGON OUT OF A DRAGONFLY? UNDERSTANDING CHINA’s ROLE IN GLOBAL PRODUCTION NETWORKS," CIRANO Papers 2009n-02a, CIRANO.
    4. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2008. "How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive," NBER Working Papers 14109, National Bureau of Economic Research, Inc.
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