China and Emerging Asia: Comrades or Competitors?

39 Pages Posted: 14 Jan 2004

See all articles by John G. Fernald

John G. Fernald

Federal Reserve Bank of San Francisco

Prakash Loungani

International Monetary Fund (IMF)

Alan G. Ahearne

National University of Ireland, Galway (NUIG) - Department of Economics

John W. Schindler

Board of Governors of the Federal Reserve System

Date Written: December 2003

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).

Keywords: Exports, trade links, exchange rates, trade equations, flying geese

Suggested Citation

Fernald, John G. and Loungani, Prakash and Ahearne, Alan G. and Schindler, John W., China and Emerging Asia: Comrades or Competitors? (December 2003). FRB International Working Paper No. 789; FRB Chicago Working Paper No. 2003-27. Available at SSRN: https://ssrn.com/abstract=484503 or http://dx.doi.org/10.2139/ssrn.484503

John G. Fernald (Contact Author)

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States
415-974-2135 (Phone)

HOME PAGE: http://www.frbsf.org/economics/economists/jfernald.html

Prakash Loungani

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7043 (Phone)
202-623-4740 (Fax)

Alan G. Ahearne

National University of Ireland, Galway (NUIG) - Department of Economics ( email )

Newcastle Road
Galway
Ireland

John W. Schindler

Board of Governors of the Federal Reserve System ( email )

Washington, DC 20551
United States
202-452-3889 (Phone)

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