China Bilateral Trade Research Articles

Responsiveness of United States – China bilateral commodity trade to real exchange rate misalignment: Does the complexity of traded products matter?

This paper assesses the impact of real exchange rate (RER) misalignment on the trade balance between the United States and China, accounting for the complexity of traded products. We employ two recent econometric techniques: the panel autoregressive distributed lag (ARDL) model to estimate both long – and short-run dynamics, and the dynamic panel threshold model of Seo, M. H., and Y. Shin (2016. “Dynamic Panels with Threshold Effect and Endogeneity.” Journal of Econometrics 195 (2): 169–186) to uncover potential non-linearities and identify critical thresholds that could lead to a regime shift. Using highly disaggregated trade data at the HS 06-digit level, encompassing 913 products from 2004 to 2020, our findings reveal a negative impact of RER misalignment on the United States’ trade balance with China. However, this detrimental effect is significant only in industries dealing with less complex products. In contrast, industries handling highly complex products show a notably positive impact. Furthermore, our results suggest that industries can benefit from an undervalued exchange rate only when they have a relatively high level of product complexity. Additionally, heightened product complexity can mitigate any adverse effects overvaluation might have on the trade balance.

Hydrocarbon trade deflection and supply‑chain trade restructuring under sanctions imposed during theRussia–Ukraine conflict

In response to international sanctions, Russia has restructured its hydrocarbon commerce through trade deflection, redirecting exports from sanctioning to non-sanctioning countries. Theresearch aimed to analyze hydrocarbon trade deflection under theRussia–Ukraine conflict within thecontext of theChina–Russia Strategic Partnership and BRICS, and to assess therestructuring of Russia’s crude oil and natural gas supply chains from 2020 to 2023. Two questions were addressed: Whether trade deflection shifted towards non-sanctioning countries, including China and other BRICS countries; whether Russia’s oil and gas supply chains were restructured towards these regions? Design incorporates themethod developed by theauthor which generates and utilizes an integrated database of Bill of Lading and export data to analyze supply-chain trade restructuring, identifying specific shifts in trade flows by product, country, and enterprises. Findings reflected that after sanctions were imposed in early 2022, Russian hydrocarbon exports to sanctioning countries declined sharply, while exports to non-sanctioning countries, particularly China and India, increased significantly. Findings demonstrate theeffectiveness of trade deflection as a strategic response to sanctions. This strategy has mitigated theadverse impacts on Russian oil and gas industry, with significant increases in exports to China and India. TheComprehensive Strategic Partnership with China has helped secure a substantial market for Russian crude oil and increased China’s energy security. This study enhances understanding of trade deflection mechanisms and provides a framework for analyzing theinterplay between international trade, geopolitical strategies, and economic resilience. Geopolitical alliances and trade partnerships have ensured ­resilience and continuity in global trade. This shift indicates strategic diversification towards Asian markets and increased Central Asian involvement. BRICS engagement has provided Russia with a platform to advocate for energy security and challenge Western dominance in global energy governance. Future research should explore other supply-chain components and analyze trade within theBRICS+ group and Russia–China bilateral trade.

Does the S-curve demonstrate an asymmetrical response to fluctuations in exchange rates?

PurposeThis study aims to examine the asymmetric S-curve between the trade balances of Pakistan and China at the commodity level using disaggregated data.Design/methodology/approachThis study focuses on Pakistan and China bilateral trade based on commodity-level data. This study delves into the S-curve phenomena by examining time series data from 1980 to 2023 across 32 three-digit industries/commodities.FindingsThe findings show significant evidence in favor of the “asymmetric S-curve” in 27 out of the 32 industries studied. This study confirms that the devaluation of home currency is not a viable solution always to improve trade balance.Research limitations/implicationsThis study considers 32 three-digit industries limiting the generalizability of findings. Due to data unavailability, the authors fail to consider other industries. In the absence of quarterly data on industry-level trade between Pakistan and China, annual data from 1980 to 2023 were used in generating the cross-correlation functions. Previous literature frequently resorted to the general consumer price index with its inherent aggregation issues, whereas this study has opted for commodity price indices to overcome the shortcomings in the estimation of S-curves at the commodity level.Practical implicationsThe findings have practical relevance in guiding policy decisions regarding commodity trade, whereas the industry-wise analysis enriches the understanding of the short-term effects of currency depreciation on trade balance dynamics.Originality/valueThe S-curve hypothesis predicts a negative cross-correlation between a country's current exchange rate and its past trade balance and a positive cross-correlation between the current exchange rate and its future trade balance. Previous empirical S-curve studies had the limitation of assuming symmetry in cross-correlation with both current and future trade balance values.

De-globalizing Trade in the Wake of the COVID-19: Impacts and Changes in the US-China Relation

The purpose of this paper is to explore the impact of the COVID-19 epidemic on global trade and its transformation of trade relations between the United States and China. The outbreak of the epidemic triggered a huge restructuring of the global trade system and accelerated the trend of global trade de-globalization. As the two largest economies, the trade relationship between the United States and China plays an important role in this process. This paper analyzes the causes of deglobalization, which are mainly caused by the fracture of industrial chain, trade protection and industrial upgrading. At the same time, the paper focuses on the factors that have caused the deglobalization trend in the post-COVID-19 era, such as changing trade agreements, poor cross-border investment environment, and the challenges and uncertainties brought by e-commerce. Finally, it concentrates on the changes of the US and China bilateral trade in the post-COVID-19 era. Affected by the epidemic, the bilateral relationship between these two countries has become more conflictual and focused on technological competition. Finally, the trend against globalization has led to inefficient economic development and the regionalization of trade because of the necessity of communication.

Spatially detailed agricultural and food trade between China and the United States

The United States and China are key nations in global agricultural and food trade. They share a complex bilateral agri-food trade network in which disruptions could have a global ripple effect. Yet, we do not understand the spatially resolved connections in the bilateral US–China agri-food trade. In this study, we estimate the bilateral agri-food trade between Chinese provinces and U.S. states and counties. First, we estimate bilateral imports and exports of agri-food commodities for provinces and states. Second, we model link-level connections between provinces and states/counties. To do this, we develop a novel algorithm that integrates a variety of national and international databases for the year 2017, including trade data from the US Census Bureau, the US Freight Analysis Framework database, and Multi-Regional Input-Output tables for China. We then adapt the food flow model for inter-county agri-food movements within the US to estimate bilateral trade through port counties. We estimate 2,954 and 162,922 link-level connections at the state-province and county-province resolution, respectively, and identify core nodes in the bilateral agri-food trade network. Our results provide a spatially detailed mapping of the US–China bilateral agri-food trade, which may enable future research and inform decision-makers.

Evolution of the bilateral trade situation between Belt and Road countries and China

The Belt and Road Initiative's (BRI) potential impact on bilateral trade between Belt and Road countries (BRCs) and China is hotly contested. It is crucial to clarify what changes in the trade situation of China-BRCs bilateral trade before and after the BRI, including economic gains and environmental costs. This study applies the decomposition of production activities method to calculate the value-added (VA) and embodied CO2 emissions (ECE) transfer in China-BRCs bilateral trade from 2004 to 2017. The relevant results are fourfold. (1) The growth rates of China's VA exports and ECE exports to the BRCs are 1.44 times and 1.36 times higher than the growth rates of imports. (2) Electricity, iron and steel, and chemical rubber products are the main sectors of China's ECE exports. The oil industry is the main industry of BRCs' VA exports. (3) From 2004 to 2017, China's bilateral trade with most of the BRCs exchanged net ECE for net VA. Compared with traditional trade, China is gradually losing net benefits in VA for reducing the net costs of ECE under GVC activities. (4) The embodied CO2 intensity (ECI) of China-BRCs bilateral trade is decreasing, and the ECI of China's exports to BRCs is 2.11 times of imports. The primary driver of a decline in ECI is the CO2 emissions coefficient. These findings demonstrate that the BRI has had a positive impact on the China-BRCs bilateral trade and GVC activities leading to cleaner exports from China and BRCs. The research comprehensive analysis framework of economic and carbon emissions of cross-border trade established in this study provides a methodological basis for subsequent studies of other environmental indicators.

Impact of imports from China on Indian manufacturing performance: an analysis of trade competitiveness

PurposeThe focus of this paper is to provide an assessment of the impact of imports from China on Indian manufacturing and capture the multifarious dimensions of India–China bilateral trade flows. By examining the comparative disadvantage imports (RCA<1), the paper critically examines their significance on India's industry output and performance and underlines factors beyond trade competitiveness.Design/methodology/approachFor examining the impact of India's manufacturing imports from China on industry performance, four stages of analysis is adopted. First, the imports with RCA <1 have been identified. For these, BRCA was also computed. Second, trends in industry performance associated with high imports from China. Third, for estimating the impact of imports on industry output, augmented production function was specified and estimated with imports from China as a potential determinant. And fourth, comparison of industry performance between India and China.FindingsThe impact of imports from China on industry output is positive and significant. A 1% increase/decrease in the share of China in world imports will result in output increasing by 0.31%. The rise in imports from China seems to be on account of non-availability of necessary intermediate and capital goods domestically, thereby making these imports critical and complementary for production. This negates the threat perception of imports from China.Research limitations/implicationsThe paper recognizes the need for understanding the firm heterogeneity in import decisions and R&D intensity of imports. Across industries, the drivers for firms' decisions to import are “learning by importing’ and “self-selection” (Camino-Magro et al., 2020). Also, another important dimension at the firm-level analysis is the elasticity of substitution between foreign and domestic inputs. If the elasticity of substitution is low then high import barriers will lead to reduction of domestic output. These firm-level issues are important for effective policy interventions.Practical implicationsOne, the inward looking focus of the industry which is exhibited in low export intensity will not provide the necessary impetus to propel the manufacturing sector to a higher technology frontier and translate the productivity gains to export competitiveness. Two, unless the domestic manufacturing is propelled from the current low/medium technology to high technology products, the current policy thrust on “self-reliance” cannot be realized.Originality/valueAnalysis is based on manufacturing imports with RCA<1 from China thereby underlining factors beyond trade competitiveness not covered by RCA methodology. Complementing the quantitative analysis with economic policy developments in China and India and contrasting the same has provided insights into the real factors determining India–China bilateral trade.

A relationship to benefit both parties

In 1978, the UK became one of the first major Western countries to sign a science and technology agreement with China Bilateral trade has increased from US$300 million to $116.2 billion China-UK cooperation on science and technology has benefited both countries In an age of globalisation, China-UK cooperation on research is a must for both sides Research cooperation between the two countries will unlock a brighter future.

무역원활화가 중국의 양자간 무역에 미치는 영향 분석

This paper examined a systematic trade facilitation measurement and empirically analyzed the effect of improving the level of trade facilitation on trade with China based on the level of trade facilitation in the top 38 countries with China.
 As a result of the empirical analysis, it was confirmed that the improvement of the level of trade facilitation plays an important role in increasing China's overall trade volume and increasing imports. In detail, port efficiency, customs environment, rule environment, and e-commerce all have a positive effect on China's total trade and import, and among them, port efficiency and e-commerce have the greatest effect on China's bilateral trade. By region, it was found that the rise in the trade facilitation index of Asian countries had the greatest effect on China's increase in trade volume.
 In order to continue to expand trade, China needs foreign cooperation policies such as continuous support and active free trade agreements to increase trade facilitation in middle and low-income countries.

Estimating the environmental and employment impacts of China's value-added trade from the perspective of value chain routes.

This study aims to evaluate the environmental and employment impacts of China's value-added trade using the gross exports decomposition method and balance of avoided factor content. The major findings are that China's value-added trade overall leads to increases in global emissions and employment, which are mainly affected by the characteristics of China's exports. However, China's imports indirectly promote global emissions reductions and have a significant driving effect on foreign employment. Trade through onefold value chains plays a dominant role in determining both impacts. Simple global value chain (GVC)-related trade contributes most to reducing global emissions but decreases global employment as well. Complex GVC-related trade overall increases global employment and emissions. At the bilateral level, the impacts are varied, and there are some instances of complex GVC-related bilateral trade that contribute to global emission mitigation. A win-win situation for the environment and employment can be achieved in China's bilateral trade with some countries through specific value chain routes. These findings can provide useful information for balancing trade growth, carbon emission reduction, and job creation and may indicate the future direction of China's upgrade in the GVCs and help allocate emission reduction responsibilities.

On The Impact of Exchange Rate Depreciation on Bilateral Trade of Egypt and China: An ARDL Approach

The main purpose of this study is to examine the relationship of exchange rate depreciation with Egypt and China bilateral trade. The Autoregressive Distributed Lag (ARDL) approach to co-integration is employed to investigate the both long run and short run relationship between the real depreciation and bilateral Trade in the case of Egypt and China over the period of 1994 to 2019. Estimation results confirm the existence of the long-term impact of depreciation on Egypt’s trade flows between the two countries. The results also revealed that growth in domestic income improved the Egypt’s trade balance while growth in China income decreased the bilateral trade flows. Over time, the findings revealed that the J-curve phenomena hold in the long-run. Results suggest two main conclusions to policy makers. First, The improvement of the trade balance needs inclusive support of Egypt's export stimulus policies. Second, Second, China presents enormous opportunities for Egyptian exports to this growing market.

How does GVC reconstruction affect economic growth and employment? Analysis of USA–China decoupling

The state of USA–China relations has become increasingly strained. The term ‘decoupling’ has been frequently used within the narrative of USA–China relations to describe the possible outcome of the relationship. A ‘decoupling’ of the USA and Chinese economies would trigger the restructuring of existing Global Value Chains (GVCs). Given this possibility, we use the 2014 World Input–Output Database (WIOD) and the hypothesis extraction method to simulate several scenarios of GVC reconstruction on economic growth and employment. From the analysis, we find that: (1) GVC reconstructions caused by USA–China decoupling would have a greater impact on China than on the USA. If USA–China bilateral trade is replaced by the surrounding economies, China's GDP and employment would fall by 2.57% and 2.34%, respectively. (2) The effects on regional economies are synergistic, with the countries directly surrounding China and the USA being more affected than India and most European countries. (3) USA manufacturing may benefit from the manufacturing repatriation policy, but the overall impact on economic growth would be limited. (4) In all reconstruction scenarios, global GDP figures are lower than they are today, demonstrating the importance of maintaining existing GVCs.

Modeling Analysis on the Structural Characteristics of Commodity Trade in Maritime “Silk Road” Economic Belt

Zhao, X.Q., 2020. Modeling analysis on the structural characteristics of commodity trade in maritime “Silk Road” economic belt. In: Li, L. and Huang, X. (eds.), Sustainable Development in Coastal Regions: A Perspective of Environment, Economy, and Technology. Journal of Coastal Research, Special Issue No. 112, pp. 300-305. Coconut Creek (Florida), ISSN 0749-0208.In order to deepen the development of commodity trade in the maritime “Silk Road” economic belt, this paper puts forward the modeling and analysis method for the structural characteristics of commodity trade in the maritime “Silk Road” economic belt. This paper uses trade intensity index, comparative advantage index, trade complementarity index and constant market share index to analyze the commodity trade structure characteristics of maritime “Silk Road” economic belt. The results show that: the fluctuation range of China's bilateral trade intensity index is basically between 1.00 and 1.70, and the trade intensity index has always been in a stable rising state, which indicates that the trade intensity between China and its commodity trading partners is relatively high, and the commodity trade exchanges are increasingly close. China has a significant comparative advantage in terms of manufactured goods, and has a high degree of consistency with Malaysia in terms of trade structure and strong competitiveness.

The US-China trade war with increasing trade policy uncertainty

PurposeThis study aims to examine the impacts of changing US trade policy uncertainty (henceforth, TPU Index) on US bilateral trade balance with China from a nonlinear methodology perspective.Design/methodology/approachThe nonlinear auto regressive distributed lag (ARDL) model, recently developed by Shin et al. (2014), is applied. This model decomposes the TPU Index series into its increases (TPU+) and decreases (TPU−) and creates two new TPU Index series.FindingsEmpirical findings indicate that increases in the TPU Index improve the US bilateral trade balance only in the short-run (no long-run impact). However, decreases in the TPU Index worsen the US trade balance in the short run but improve it in the long run. Apart from these effects detected on US–China bilateral trade balances, this empirical study draws the conclusion that changing trade policy uncertainty plays a significant determining role for bilateral trade volumes.Originality/valueDecomposed TPU index with the nonlinear ARDL model enables us to examine the separate impacts of the changes in TPU+ and TPU− indexes on US bilateral trade balance with China. Therefore, this model may discover potentially concealed-hidden true impacts of TPU index on US bilateral trade balance with this country.

The trade facilitation impact of the Chinese diaspora

AbstractUsing an enhanced data set on the population share of overseas Chinese in 1970 and 1990, this paper analyses the impact of the Chinese diaspora on facilitating China's bilateral trade during the period 1973–2013. Our findings suggest substantial trade creation effects resulting from the presence of ethnic Chinese in the trade partner population. Diaspora impacts on Chinese bilateral imports are in general higher than those found for exports. Coethnic networks play a larger role as long as the partner country does not have an RTA with China in place. Among export sectors, effects found were strongest for food, as well as for machinery and transport equipment. In regard to imports, coethnic networks matter mostly for raw materials, machinery and transport equipment, and chemicals.

Determinants of forest product group trade by gravity model approach: A case study of China

The study emphasised the basic factors which are responsible for influencing China's forest product group trade. The gravity model approach is applied on forest product group 44, 47, 48, 49 and 94 by using panel data from period 2001 to 2018. Panel unit root test shows that factor affecting variables are stationary for all models while, the Hausman test is used for suitable model selection. Results revealed that GDP and GDPC have a positive impact on trade, whereas distance has an inverse impact on trade. Other factor used in the study also has a significant effect on the China trade. The forest trade is significantly affected after the global economic crises and countervailing/antidumping duties imposed by USA and other countries on China. Similarly, APEC and OECD have significant impact on China bilateral trade of forest products. This study concluded that it would be better to promote exports and import to countries having large economies or short distance countries. It is suggested that by promote Chinese language to partner countries can increase the trade flow of China's forest product group trade.

ФАКТОРЫ РОСТА И ТРЕНДЫ МИРОВОЙ ТОРГОВЛИ

The article is devoted to an in-depth study of the modern factors and trends of the world trade. It provides an overview of the economic literature and development of theoretical frameworks of global trade factors. Three main factors are identified in the article, namely: (1) globalization, (2) computer revolution and ICT-technologies, and (3) China’s opening to the world. The tendencies of the international trade in the past three decades are analyzed. The main trends of world economy and trade are discussed. There is particular emphasis on the world trade reduction causes in 2015 and 2016. Special attention is paid to the changes in the US and China bilateral trade. GDP growth slowed down in both the U.S. and China during three years of their trade war. Nevertheless, despite this relative decline the United States and China remain the world’s largest importers and exporters of goods and services and the main trading partners. USA accounts for 8.8 percent of global goods exports in 2018 (second place after China with 13.1 percent) and 13.5 percent of global imports (first place; China is 11.0 percent). The author’s conclusion is as follow: the proportion between the world trade and global GDP that has been established by now should be considered as normal and optimal in terms of the global reproduction system’s functioning.

Emissions and health impacts from global shipping embodied in US–China bilateral trade

Global shipping activity emits 938 million tonnes of carbon dioxide annually, surpassing the eighth highest emitting country. Although the impacts from the shipping industry have been investigated over the past three decades, allocating responsibilities remains a difficult issue. Numerous parties should share the responsibility and quantitative analysis is therefore required when considering the interaction between the global economy, shipping and ecological connectivity. Here, beginning with our shipping emission inventory model based on satellite-observed vessel activities, we evaluated trade-embodied shipping emissions and their impacts on human health. Combined with international trade databases, we traced shipping impacts back to responsible bilateral trade and proposed an integrated trade–shipping–air quality–health impact nexus. Quantitative analysis shows that the US–China bilateral trade is responsible for 2.5% of the global shipping carbon dioxide emissions and 4.8% of ship-related global premature deaths caused by air pollution. Our research provides the methodology to allocate intercontinental responsibilities to trade pairs and ships. International shipping is a major emitter of greenhouse gases, but quantifying responsibilities has been difficult. This study uses satellite-observed data on vessels to determine the emissions from and subsequent health impacts of US–China bilateral trade of goods.

INDIA–CHINA: CHANGING BILATERAL TRADE AND ITS EFFECT ON ECONOMIC GROWTH

This paper highlights the policy aspects of India and China, in the context of consensus building on bilateral trade, which is the cornerstone of diplomatic and political ties between the two countries. India and China have witnessed uninterrupted economic development with a significant rise in bilateral trade because of protrade policies in the last few decades. In this backdrop, this paper examines the dynamic spillovers of India–China’s bilateral trade on the economic growth of the two countries. For the purpose, Autoregressive distributed lag (ARDL) model in multivariate framework is utilized with gross capital formation (GCF) and foreign direct investment (FDI) as two additional explanatory variables. The results highlight that the India–China bilateral trade share has significant long-run impact on the growth of GDP per capita (GDPP) of the two countries, while the impact is more pronounced for China. The growth rates of the two countries are found significantly cointegrated with the variables in question. The results provide important insights in foreign trade patterns, with policy implication for trade and economic co-operations between the two countries.

Distinguishing China's processing trade in the world input-output table and quantifying its effects

ABSTRACTDistinguishing processing trade is crucial to national input-output table-based research on China's international trade. This paper further investigates the importance of distinguishing China's processing trade in multicountry input-output table-based studies. We focus on the bias in China's bilateral trade in value added caused by China's undistinguished processing trade. We construct a product-by-product world input-output table capturing China's processing trade based on the World Input-Output Database. Empirical studies show that, if China's processing trade is undistinguished, the profile of China's bilateral trade in value added would be seriously distorted; China's bilateral net trade in value added with some economies, such as Japan, Korea and Taiwan, would be significantly underestimated, while it would be significantly overestimated for some other economies, such as the United States. Distinguishing processing trade in multicountry input-output tables is also crucial when China's bilateral trade in value added is considered.