Bilateral trade and shocks in political relations: Evidence from China and some of its major trading partners, 1990–2013

Du, Yong; Ju, Jiandong; Ramı́rez, Carlos; Yao, Xi

doi:10.1016/j.jinteco.2017.07.002

Cited by 82 publications

(63 citation statements)

References 43 publications

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“…The impact of political conflict on bilateral trade is an argumentative issue among political economy. Conventional view suggests that political conflict can greatly undermine economic activity, particularly the bilateral trade between countries (Du, Ju, Ramirez, & Yao, 2017;Fisman, Hamao, & Wang, 2014;Massoud & Magee, 2012;Reuveny & Kang, 2003). Political conflicts are frequently associated with trade sanctions and conflicts may also decrease bilateral trade by increasing the cost of traders involved in multinational business (Glick & Taylor, 2010).…”

Section: Literature Reviewmentioning

confidence: 99%

Does political conflict affect bilateral trade or vice versa? Evidence from Sino-U.S. relations

Song

Tao

et al. 2019

Economic Research-Ekonomska Istraživanja

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This paper investigates the dynamic causal relationship between Sino-U.S. political conflict and bilateral trade using a time-varying (bootstrap) Granger full-sample causality test and sub-sample rolling window estimation. The result indicates that Sino-U.S. political conflict and bilateral trade may interact in various ways. Bilateral trade has both positive and negative effects on political conflict in several sub-phases, and in turn, political conflict has the same impacts on bilateral trade. In general, the relationship between Sino-U.S. political conflict and bilateral trade is not always consistent with the model of Polachek, which states bilateral trade has significantly reduced political conflict. In the face of a severe economic situation, China and the U.S. government should strengthen trade cooperation and seek common ground of economic interests in order to expand the improvement of political relations.

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Section: Literature Reviewmentioning

confidence: 99%

Does political conflict affect bilateral trade or vice versa? Evidence from Sino-U.S. relations

Song

Tao

et al. 2019

Economic Research-Ekonomska Istraživanja

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“…5.1 | The dynamic change of the sanction effects Du et al (2017) find that political shocks generally exist in the short term, and the impacts on trade can last for up to three months. Here, we use the method of event study to track the dynamic changes of the sanction effects.…”

Section: Extended Analysesmentioning

confidence: 99%

“…Previous literature usually takes a certain political event as a shock to analyse trade consequences (Heilmann, 2016;Michaels & Zhi, 2010;Pandya & Venkatesan, 2016). There exists only limited literature which investigates the economic consequences of political relations with China (Du, Ju, Ramirez, & Yao, 2017;Fisman, Hamao, & Wang, 2014;Fuchs & Klann, 2013). Against this background, this paper looks at the Sino-Philippine fruit trade following the Huangyan Island dispute as a quasi-natural experiment to explore whether a country's political relations with China affect its bilateral trade.…”

Section: Introductionmentioning

confidence: 99%

The impact of political relations on international trade: China–Philippines island dispute as a quasi‐natural experiment

2020

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In May 2012, with tensions over Huangyan Island taking an increasingly sour turn, China released a document to strengthen inspection and quarantine of fruits imported from the Philippines. To many, this retaliation implied that the former launched economic sanctions against the latter over the growing conflict. As such, this paper takes that tension as a quasi‐natural experiment to examine the impact of deteriorating political relations on trade. We employ difference‐in‐difference to conduct an empirical investigation by using the monthly data of the Philippines’ fruit export. The estimation results show that after the implementation of the document, in comparison with other export destination countries, Philippine banana and pineapple exports to China decreased by 42% and 88%, respectively. However, the sanction effects weakened over time. Extended analyses also find that the Philippines evaded the sanctions to some extent by trans‐shipping through third countries, transferring exports to other countries, and deeply processing fruits. In conclusion, the sanctions were not as effective as expected.

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“…Many state and business actors arguably do not have incentives to link politics and economics (Davis & Meunier, 2011), and Chinese state actors may also try to protect foreign businesses that bring substantial local benefit despite popular nationalist pressures (Miura, 2018). Nevertheless, the popular economic backlash has affected trade flows between Japan and China and the profits of businesses attempting to maintain business as usual despite political tensions (Davis, Fuchs, & Johnson, 2017; Du, Ju, Ramirez, & Yao, 2017; Li & Liu, 2017; Masterson, 2012).…”

Section: Business–politics Nexus In Northeast Asiamentioning

confidence: 99%

Boycotting Japan: Explaining Divergence in Chinese and South Korean Economic Backlash

Vekasi

Nam

2019

Journal of Asian Security and International Affairs

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Japan has a ‘cold politics, hot economics’ relationship with both China and South Korea where political relations are tense and business overall flourishes. Despite the similarities, the political mobilisation of consumers in response to Japanese business interests diverge: event, trade and tourism data show that South Koreans are less likely to link economic interests with their political grievances with Japan compared to their Chinese counterparts even though the sources of the tensions are largely parallel. The divergence arises from different ways economic globalisation has shaped national identity. In China, economic globalisation has strengthened a nativist identity with strong anti-foreign components. Korean national identity has been formed by economic integration and interdependence. While strong national identity and anti-foreign elements exist, they are delinked from economic interests. Survey and event data from South Korea and China show that the variation in consumer politics is driven by attitudinal differences in the population that is strongly anti-Japanese. Social media data shows how citizens link or delink politics and business to mobilise for collective action and provide qualitative evidence that how identities interact with globalisation explain country-level variation.

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Bilateral trade and shocks in political relations: Evidence from China and some of its major trading partners, 1990–2013

Cited by 82 publications

References 43 publications

Does political conflict affect bilateral trade or vice versa? Evidence from Sino-U.S. relations

Does political conflict affect bilateral trade or vice versa? Evidence from Sino-U.S. relations

The impact of political relations on international trade: China–Philippines island dispute as a quasi‐natural experiment

Boycotting Japan: Explaining Divergence in Chinese and South Korean Economic Backlash

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