The Shifting Structure of China’s Trade and Production

September 1, 2007

Preview Citation

Format: Chicago

Li Cui, and Murtaza H Syed. The Shifting Structure of China’s Trade and Production, (USA: International Monetary Fund, 2007) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper uses disaggregated trade data to assess how the expansion of China's production capacity and its changing production structure may be affecting its trade linkages with other countries. It finds that China is moving away from traditional assembly operations in its processing activities and its exports have started to rely more on domestically sourced components. In turn, China's imports and exports have begun to delink, with increased domestic sourcing contributing to the recent increase in its trade balance. In addition, as China moves up the value chain, both its imports and exports have become more sophisticated than in the past. As a result of these shifts, China may be becoming more exposed to fluctuations in the strength of the global economy, and changes in its exchange rate could have a bigger impact on the trade balance and the domestic economy than commonly believed.

Subject: Exports, Imports, Real effective exchange rates, Trade balance, Trade surpluses

Keywords: Processing trade, Product composition, Production capacity, Trade surplus, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/214
Stock No:

WPIEA2007214
ISBN:

9781451867787
ISSN:

1018-5941

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