China's Changing Trade and Production Structure

I have linked to this paper as it an area of research that is of particular interest to me personally. In this sense, this blog represents a kind of diary of must read papers.

The analysis in this paper is basic and descriptive but it provides usesful background information and details of data sources.

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"The Shifting Structure of China's Trade and Production"
IMF Working Paper No. 07/214


Contact: LI CUI
International Monetary Fund (IMF)
Email: lcui@imf.org
Auth-Page: http://ssrn.com/author=343401

Co-Author: MURTAZA H. SYED
International Monetary Fund (IMF)
Email: msyed@imf.org
Auth-Page: http://ssrn.com/author=907780

Full Text: http://ssrn.com/abstract=1033207

ABSTRACT: 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.