Characteristics and determinants of asymmetric phase shifts in China’s manufacturing industrial production cycles

Abstract

ABSTRACTEmploying a panel of 30 Chinese manufacturing industries from January 2003 through May 2017 (2003M01-2017M05), this study is the first attempt to investigate the characteristics and determinants of asymmetric phase shifts in China’s manufacturing industrial production cycles. The empirical results suggest that China’s manufacturing industries and aggregate industry have experienced similar frequent phase shifts, but remarkable differences exist in the phase shifts across manufacturing industries. Furthermore, China’s manufacturing industries tend to comove between cyclical phases in sync with the aggregate industrial cycle, but the comovement is asymmetric. In addition, the estimation results of the panel logit model indicate that both the spillovers through input-output linkages and some macroeconomic shocks (i.e. monetary policy and financial policy shocks) are significant determinants of China’s manufacturing industrial phase shifts; however, their effects are asymmetric. Finally, suggestions are offered to Chinese policymakers not only to weaken the economic effect of cyclical fluctuations, but also to promote growth in the manufacturing industries.