China’s Trade in Asia and the World: Long Run Relation with Short Run Dynamics

Abstract:     
China has made a room in international trade and threatens to the existing competitive players. This paper attempts to find the long-run relation with short-run dynamics of China’s trade in Asia and the world. This study observed that China is economically integrated with Asia and the world. China has a double role in international trade – (i) China acts as an attractor of all inputs from Asia and (ii) China pushes the products in international market with a comparative advantage in price competition. Co-integration technique provides the economic integration of China’s export to the US and its import from Asian nations. This study also reveals that the speed of China’s import from Asia is faster than that of China’s export to the US.

Number of Pages in PDF File: 18

Keywords: Economic Integration, production network, Co-integration, Asia, China, US, Error correction, Double Engine of Growth, Export, Import, Long run, short run dynamics

JEL Classification: C1, F1, R3

working papers series