China Integrates Asia with the World: An Empirical Study

Dinda, Soumyananda (2012): China Integrates Asia with the World: An Empirical Study. Published in: Journal of Chinese Economic and Foreign Trade Studies , Vol. 7, No. 2 (November 2014): pp. 70-89.

Abstract

The paper focuses on China’s economic integration with Asia region and the world. It also attempts to find the long run relation with short run dynamics of China’s trade in Asia and the world. The augmented Dicky-Fuller (ADF) and Phillips-Perron (PP) methods are applied to test the time-series properties of the variables. Co-integration technique is used to detect the economic integration of China’s export to the US and its import from Asian nations using monthly aggregate data from December 2005 to July 2010. This study observed that empirically China’s export to the US depends on exchange rate and China’s import from Asia depends on China’s export to the US. China has double role in international trade – (i) China acts as an attractor of all inputs from Asia and (ii) China exports the final products in international market. This study also reveals that the speed of China’s import from Asia is faster than that of China’s export to the US. The results imply that China’s trade should be treated as an engine of growth in the Asian developing countries and the trade promotion policies should be encouraged. The emerging China will create other opportunities through trade integration with Asia and the world. China is economically integrated with region and the world. The paper contributes to measure the speed of China's export and import within Asia and the world. These empirical findings will help policy makers to formulate their policy and design the mechanism for application as per their targets.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic Integration, production network, Co-integration, Asia, China, the US, ECM, Engine of Growth, Export, Import, Long run, Short run dynamics.
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C52 - Model Evaluation, Validation, and Selection; F - International Economics > F2 - International Factor Movements and International Business; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance; F - International Economics > F5 - International Relations, National Security, and International Political Economy; N - Economic History > N9 - Regional and Urban History > N95 - Asia including Middle East; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity

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