The Impact of China's Slowdown on the Asia Pacific Region: An Application of the GVAR Model

Inoue, Tomoo; Kaya, Demet; Ohshige, Hitoshi

doi:10.1596/1813-9450-7442

“…This evidence for the Republic of Korea may shed light on a finding of Inoue, Kaya, and Ohshige (2015). Using a Global Vector Autoregressive model and quarterly data over the period covering the first quarter (Q1) of 1979 until Q3 2014, they reported that a 1% negative PRC GDP shock would only reduce the Republic of Korea's GDP by 0.07%.…”

Section: Resultsmentioning

confidence: 91%

How Would a Slowdown in the People's Republic of China Affect its Trading Partners?

Thorbecke

¹

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication.ADB recognizes "China" as the People's Republic of China, and "Hong Kong" as Hong Kong, China. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Working papers are subject to formal revision and correction before they are finalized and considered published. AbstractThe People's Republic of China (PRC) has become an important importer for many countries. This paper investigates how turbulence in the PRC can spill over to trading partners through the trade channel. Exports from several East Asian and Southeast Asian countries to the PRC exceed 10% of their gross domestic products. To shed light on economies' exposures to the PRC, this paper estimates a gravity model. The results indicate that Taipei,China and members of the Association of Southeast Asian Nations are exposed to the PRC because they produce goods for the PRC market and are exposed to advanced economies because they ship parts and components to the PRC for processing and reexport to the West. The Republic of Korea is more exposed to a slowdown in advanced economies that purchase processed exports from the PRC than to a slowdown in the PRC. Major commodity exporters such as Australia, Brazil, Indonesia, and Saudi Arabia and exporters of sophisticated consumption and capital goods such as Germany and Switzerland are exposed to a slowdown in the PRC domestic market. This paper also estimates import elasticities for the PRC. The results indicate that imports for processing into the PRC are closely linked to processed exports from the PRC to the rest of the world and that ordinary imports are closely linked to PRC gross domestic product. The renminbi exerts only a weak...

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“…Ahuja and Myrvoda (2012), or global vector autoregressive (GVAR) models, e.g. Dizioli et al (2016), Dreger and Zhang (2013), Hong et al (2016), Cesa-Bianchi et al (2011), Cashin et al (2016), or Inoue et al (2015 (see Table 1). Most of these models include variables such as real GDP growth, inflation, real exchange rates, and short-and long-term interest rates.…”

Section: Empirical Modelsmentioning

confidence: 99%

Propagation of changes in demand through international trade: A case study of China

Andritzky

¹

,

Kassner

²

,

Reuter³

2018

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Propagation of Changes in Demand throughInternational November 2016 AbstractChina's economy, the second largest in the world, is undergoing a fundamental transition. Its transition from a strong focus on investment and exports towards a larger share of consumption could have important ramifications for China's trading partners. Using China as a case study, this paper deploys a sectoral input-output (IO) analysis to take into account higher-round spillovers from a reduction in import demand or a shift in the composition of the Chinese economy. This approach demonstrates strong indirect effects that exceed by far the initial shock from direct trade links, reflecting China's integration into a closely knit global value chain. The result suggests that the ongoing transition in China will have important effects on the global economy.

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“…Employing the global vector autoregressive model and using a dataset through the third quarter of 2014 for 33 countries, Inoue et al (2015) find that a negative Chinese GDP shock adversely affects export-dependent members of the East Asian product value chain, such as Japan, Malaysia, Singapore and Thailand, as well as commodity exporters, such as Indonesia.…”

Section: Introductionmentioning

confidence: 99%

Effects of China's Structural Change on the Exports of East Asian Economies

Lee

¹

,

Park

²

,

Shin

³

2017

China and World Economy

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The Chinese economy is slowing down and is in the midst of a structural transformation from export‐led and investment‐led growth to domestic demand‐led and consumption‐led growth. While there are widespread concerns among China's trading partners about the effect of the slowdown in China's growth on their exports, China's structural changes are also likely to have a significant impact: for example, China will import fewer machines and more cosmetics. The central objective of the present paper is to empirically examine the effect of China's structural transformation on the exports of East Asian economies, which have close trade linkages with China. We find that economies that have failed to increase the share of consumption goods in their exports to China have suffered larger declines in their quantities of exports to China. In addition, economies that have suffered losses in their shares of China's parts and components imports have faced reductions in their shares in China's total imports.

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The Impact of China's Slowdown on the Asia Pacific Region: An Application of the GVAR Model

Cited by 22 publications

References 33 publications

How Would a Slowdown in the People's Republic of China Affect its Trading Partners?

How Would a Slowdown in the People's Republic of China Affect its Trading Partners?

Propagation of changes in demand through international trade: A case study of China

Effects of China's Structural Change on the Exports of East Asian Economies

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