Structure of Comparative Advantage of China and India： Global and Regional Dynamics

This paper investigates the extent of competition between China and India in the world and ASEAN markets. The analysis is undertaken using the concept of revealed comparative advantage, relative market shares, long‐term trend analysis and statistical tests of convergence. In the context of the ASEAN market the evaluation of competition between India and China has been undertaken with special reference to the prior implementation of the ASEAN‐China Free Trade Area relative to the ASEAN‐India Free Trade Area. The results suggest that threat perceptions at the product level might currently prevail for both economies from each other across all sectors in both markets even though the intensity of the competitive threat varies across products. However, long‐term trend analysis shows that the patterns of comparative advantage of India and China are evolving along divergent paths and, therefore, competition between the two economies might not be a major issue.     

Composition of Imports and Exports by Category of Commodities

~~Composition of Imports and Exports by Category of Commodities     

Composition of Imports and Exports by Category of Commodities

~~Composition of Imports and Exports by Category of Commodities     

Composition of Imports and Exports by Category of Commodities

~~Composition of Imports and Exports by Category of Commodities~~     

Composition of Imports and Exports by Category of Commodities

Unit:U S$1,000CommodityTotalI. Primary Goods0. Food and live animals used chiefly for food1. Beverages and tobacco2. Non-edible Raw materials(excluding fuels)3. Mineral fuel, lubricants and related materials4. Animal and vegetable oils, fats and waxII. Manufactured Goods5. Chemicals and related products6. Manufactured goods classified chiefly as raw materials7. Machinery and transport equipment8. Miscellaneous products9. Products not otherwise classifiedSource: General Administration …     

Composition of Imports and Exports by Category of Commodities

Unit:US$1000CommodityTotalI.Primary Goods0.Food and live animals used chiefly for food1.Beverages and tobacco2.Non-edible Raw materials(excluding fuels)3.Mineral fuel,lubricants and related materials4.Animal and vegetable oils,fats and waxII.Manufactured Goods5.Chemicals and related products6.Manufactured goods classified chiefly as raw materials7.Machinery and transport equipment8.Miscellaneous products9.Products not otherwise classifiedSource:General Administration of Customs,PRC.…     

Composition of Imports and Exports by Category of Commodities

~~Composition of Imports and Exports by Category of Commodities~~     

Composition of Imports and Exports by Category of Commodities

~~Composition of Imports and Exports by Category of Commodities~~     

Composition of Imports and Exports by Category of Commodities

Unit: US$1 000CommodityTotalI. Primary Goods0. Food and live animals used chiefly for food1. Beverages and tobacco2. Non-edible Raw materials(excluding fuels)3. Mineral fuel, lubricants and related materials4. Animal and vegetable oils, fats and waxII. Manufactured Goods5. Chemicals and related products6. Manufactured goods classified chiefly as raw materials7. Machinery and transport equipment8. Miscellaneous products9. Products not otherwise classifiedSource: General Administration …     

Composition of Imports and Exports by Category of Commodities

~~Composition of Imports and Exports by Category of Commodities     

Foreign direct investment in China: Policy,recent trend and impact 1

One of the most important elements of China's economic reform has been the promotion of foreign direct investment (FDI) inflow. Government polices on FDI have gone through different stages in their main objectives since the late‐1970s, from gradually opening to foreign investors, to actively encouraging inward investment, directing FDI in accordance with domestic industrial restructuring, and complying with China's World Trade Organization (WTO) obligations. FDI in China has experienced rapid growth especially since the mid‐1990s, as well as structural change. Most of the earlier investments were small scale, labor‐intensive and export‐oriented. In recent years, more investment has been large scale and more capital and technology intensive, aiming at both domestic and export markets. Moreover, increasingly more investment has come from the industrial world, and has located along the eastern coastal regions, in additional to the two southeastern provinces. FDI has played a crucial role in China's rapid growth, economic transition, and, mostly importantly, integration with the world. China's recent accession to the WTO provides more incentives to foreign investors. At the same time, it will also result in more intense competition for domestic firms.     

China's outward foreign direct investment in the Belt and Road Initiative: What are the motives for Chinese firms to invest?

Because of the potentially large and important effects of the extremely ambitious Belt and Road Initiative (BRI) launched by China in late 2013, considerable attention has been given to the motives for, and repercussions of, the BRI-driven infrastructural projects. Yet, the non-infrastructural outward foreign direct investment (FDI) from China to BRI countries, which varies quite substantially across different sectors and different countries, has not yet received much attention. In contrast to some recent studies showing that the massive initiative has increased China's total FDI outflows to fellow BRI countries, in this paper, based on our sector-level difference-in-differences models, we find that effect to be statistically insignificant. Yet, at the same time, we provide empirical evidence on the sectoral pattern of China's outward FDI before and after 2014 indicating that China's FDI outflows to BRI countries have significantly increased in sectors characterized by overcapacity and contributing to pollution in China, thereby demonstrating that China's BRI-driven outward FDI has been very selective in terms of sectors. We confirm these findings with a variety of robustness checks and show that it is BRI countries with relatively low institutional quality that have been more likely to receive these types of FDI from China. We thus speculate that Chinese firms have been motivated to place FDI investments in BRI countries for the sake of alleviating China's own overcapacity and pollution problems. Our findings lead us to suggest that, although these sectoral patterns are consistent with the different stages of economic development in which China and its fellow BRI-identified countries find themselves, Chinese investors and host country governments should be more concerned with the potential for unwanted side-effects of the FDI investments so that the mutually beneficial effects of the BRI can be sustained into the indefinite future among all countries involved.     

FDI对我国制造业升级的影响研究——基于省级面板数据的实证

当前FDI流入我国增速已经放缓;然而,FDI流入高技术制造业的比重却正在提高。FDI流向正在发生的深刻变化将对我国制造业升级产生深远影响。在FDI流入总量及流向正发生深刻变化的新条件下,探讨如何更加合理有效地利用FDI,促推我国制造业升级,正成为急需探讨的新课题。本文运用1996~2014年中国省级面板数据,通过构建FGLS模型,对FDI影响制造业升级的效应进行了实证检验,结果表明：从全国层面来看,FDI对劳动密集型与技术密集型制造业发展都有明显的促推作用;而对资本密集型制造业的发展则存在较为明显的负向影响。从分地区层面来看,FDI促进了劳动密集型制造业从东部向中部地区转移,资本密集型制造业由东部向中、西部地区转移;此外,FDI还促进了东部地区技术密集型制造业占比提高。但是,FDI在西部对制造业的投资方向过于单一,主要集中于资本密集型制造业,这对我国西部地区制造业的长期发展不利。因而,要顺应FDI新变化,发挥政府宏观调控作用,更加合理、有效地利用好FDI。     

Why is China so attractive for FDI? The role of exchange rates

This paper argues that China's exchange rate policy played a critical role in its FDI boom. Devaluation of the Yuan (Renminbi) and the policy of pegging the Yuan to the Dollar both improved China's competitiveness in attracting Foreign Direct Investment. Examining the hypothesis in the context of Japanese FDI for nine Chinese manufacturing sectors from 1981 to 2002, the empirical results show that the real exchange rate between the Yuan and Yen is one of the significant variables determining Japanese direct investment in China. The devaluation of the Yuan substantially enhanced inflows of direct investment from Japan, and the response of FDI to the change of the real exchange rate is elastic.     

Remedy or Poison: Impacts of China's Outward Direct Investment on Its Exports

During the past decade, China's outward direct investment (ODI) and exports have experienced rapid growth, drawing increasing attention to the relationship between them. Using the gravity model based on panel data on China's ODI and trade to 174 countries and regions during 2003–2012, the present paper investigates the impacts of China's ODI on exports. We find that China's ODI to a host country significantly promotes China's trade with that economy: a 10‐percent increase in ODI stock can lead to a 2.14‐percent increase in exports, a 2.07‐percent increase in imports and a 2.87‐percent increase in net exports. The scale of the host country's economy, its infrastructure and its distance to China also have significant impacts on China's exports. Therefore, growth in ODI will facilitate China's trade and integration into the global economy, and enhance industrial upgrading in China by transferring the low‐end industries abroad.     

FDI导致中国制造业价格贸易条件恶化了吗?——基于微观贸易数据的GMM方法研究

本文通过建立SITC五位数分类商品与制造业28个行业的对照表,基于微观贸易数据测算了中国制造业28个行业的价格贸易条件,并采用动态面板GMM估计从行业层面分析了FDI对制造业价格贸易条件的影响。研究结果表明:首先,不是所有制造业行业的价格贸易条件都恶化,科技含量较高行业的价格贸易条件不断改善;其次,实证研究证明FDI与中国制造业价格贸易条件正相关,FDI不是造成中国制造业价格贸易条件恶化的因素;最后,增加制造业各行业的资本和科技投入,实施规模生产是改善制造业价格贸易条件的有效途径。     

Is China's FDI coming at the expense of other countries?

We analyze how China's emergence as a destination for foreign direct investment is affecting the ability of other countries to attract FDI, using an approach that accounts for the endogeneity of China's FDI. Results suggest that China's rapid growth and attractions as a destination for FDI also encourages FDI flows to other Asian countries, as if producers in these economies belong to a common supply chain. There is also evidence of FDI diversion from OECD recipients. We interpret this in terms of FDI motivated by the desire to produce close to the market where the final sale takes place. Firms more inclined to invest in China for this reason are correspondingly less inclined to invest in the OECD. A detailed analysis of Japanese foreign direct investment outflows disaggregated by sector further supports these conclusions. J. Japanese Int. Economies 21 (2) (2007) 153–172.     

The Strategy of foreign-invested manufacturing enterprises in China: Export-orientated and market-orientated FDI revisited

This paper examines export-orientated and market-orientated foreign direct investment (FDI) in China's manufacturing industry. Based on Fung's () survey estimation of China's market-orientated FDI in 1992 and China's Third National Industrial Census in 1995, we quantify the proportion of market-orientated FDI in China 1992–2002. By combining and verifying various data sources, our estimation shows that market-orientated FDI accounts for the majority of China's total inward FDI in manufacturing industry and has grown faster than export-orientated FDI over the period 1992–2002. Our industry level analysis suggests that Overseas Chinese investors are more export-orientated than Western investors. The study suggests that many inward investors follow a dual market strategy. The coexistence of export-orientated and Chinese domestic market-orientated FDI is a reflection of the flexibility of MNEs to adjust and adapt ownership attributes to the local market context. The study offers insights into the evolutionary development path taken by foreign-invested manufacturing enterprises in China.     

Does Foreign Direct Investment Provide Desirable Development Finance？ The Case of China

Foreign direct investment (FDI) is often considered as a cost-effective and risk-reducing source for development finance. This paper,however,shows that FDI finance often entails underestimated risks and costs. FDI might react sensitively to business cycles and might not be as "permanent" as conventionally believed. FDI might also accelerate other forms of capital flow in times of financial difficulties and,hence,destabilize financial order. In addition to the risks,compensations to FDI and the high import-dependency of FDI-related trade lead to a considerable drain on the balance of payments. Moreover,the reliance on foreign capital for development finance is equivalent to building a Ponzi financing scheme and,therefore,is unsustainable. Given the fact that FDI financing is risky and costly and China does not lack savings,it is suggested in the present paper that China's efforts in attracting FDI should not aim at external capital provisioning.     

Does Foreign Direct Investment Affect the Growth of Local Firms？ The Case of China＇s Electrical and Electronics Industry

Does foreign direct investment(FDI) into developing countries affect the growth of local firms in host countries? Using a dataset of 38 sectors in China’s electrical and electronics industry,in this paper,we analyze whether FDI has a positive effect on local firms,with technology spillovers,added value and increasing total factor productivity,or a negative, market stealing,effect.Estimating the relationship between growth of local firms and investment of foreign firms,our results show that FDI is likely to have a negative impact on the growth of local firms in sectors with large disparities in technology and less experience in business.Therefore,local firms lacking in technology need to find markets with no competition from foreign firms or determine strategies to compensate technology disparities.