Review of World Economics

, Volume 143, Issue 2, pp 201–226 | Cite as

China and the Exports of Other Asian Countries



We analyze the impact of China’s growth on the exports of other Asian countries, distinguishing China’s demand for imports from its penetration of export markets. We account for the endogeneity of Chinese exports by applying instrumental variables in a gravity model with country-pair fixed-effects. We find that China’s crowding-out effect is felt mainly in markets for consumer goods and hence by less-developed Asian countries, not in markets for capital goods or by the more advanced Asian economies. Meanwhile, China has been sucking in imports from its Asian neighbors, but this effect is mainly felt in markets for capital goods. Hence, more and less developed Asian countries are being affected very differently by China’s rise.


China Asian Countries exports gravity model 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Ahearne, A. G., J. G. Fernald, P. Loungani, and J. W. Schindler (2003). China and Emerging Asia: Comrades or Competitors? International Finance Discussion Paper 789. Board of Governors of the Federal Reserve System, Washington, D.C.Google Scholar
  2. 2.
    Anderson, J. (1979). A Theoretical Foundation for the Gravity Equation. American Economic Review 69 (1): 106–116.Google Scholar
  3. 3.
    Anderson, J., and D. Marcouiller (2002). Insecurity and the Pattern of Trade: An Empirical Investigation. Review of Economics and Statistics 84 (2): 342–352.Google Scholar
  4. 4.
    Anderson, J., and E. van Wincoop (2003). Gravity with Gravitas: A Solution to the Border Puzzle. American Economic Review 93 (1): 170–192.Google Scholar
  5. 5.
    Eichengreen, B., and D. Irwin (1995). Trade Blocs, Currency Blocs, and the Reorientation of Trade in the 1930s. Journal of International Economics 38 (1): 1–24.Google Scholar
  6. 6.
    Ianchovichina, E., and T. Walmsley (2005). Impact of China’s WTO Accession on East Asia. Contemporary Economic Policy 23 (2): 261–277.Google Scholar
  7. 7.
    IMF (International Monetary Fund) (2004). The Global Implications of the U.S. Fiscal Deficit and of China’s Growth. World Economic Outlook (April): 63–102.Google Scholar
  8. 8.
    Mayer, J. (2003). The Fallacy of Composition: A Review of the Literature. UNCTAD Discussion Paper 166. United Nations Conference on Trade and Development, Geneva.Google Scholar
  9. 9.
    Rose, A. (2004). Do We Really Know That the WTO Increases Trade? American Economic Review 94 (1): 98–114.Google Scholar
  10. 10.
    Yang, T. Z., and D. Vines (2000). The Fallacy of Composition and the Terms of Trade of Newly Industrializing Economies. Unpublished manuscript. Oxford University.Google Scholar

Copyright information

© Kiel Institute 2007

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of CaliforniaBerkeleyUSA
  2. 2.Sookmyung UniversitySeoulSouth Korea
  3. 3.International Monetary FundWashington, D.C.USA

Personalised recommendations