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The Shifting Structure of China’s Trade and Production
Author:
Li Cui null

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Mr. Murtaza H Syed
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Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 214
Language:
English
Publication Date:
01 Sep 2007
DOI:
https://doi.org/10.5089/9781451867787.001
ISBN:
9781451867787
ISSN:
1018-5941
Pages:
29
Keywords:
WP; trade surplus; production capacity; processing trade; product composition
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund