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Vertical Specialization and Trade Surplus in China by Wang Wei

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6

An empirical analysis of the relation between imports and exports of China’s foreign-invested enterprises based on vertical specialization

Abstract:

Based on vertical specialization, and analyzing the cointegration relation, Granger causality tests, the ECM and Impulse response functions, the chapter comes to the following conclusion: there is evidence of a long-run cointegrating relationship between the imports and exports of FIEs in China; in any case of disequilibrium, the system will converge towards equilibrium. The policy implication of the exercise is straightforward; namely, linkages between imports and exports appears to be important for rebalancing China’s foreign trade, notably due to vertical specialization.

Key words

Vertical ...

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