Chinese bilateral intra-industry trade: a panel data study for 50 countries in the 1992-2001 period
Faculty of Applied Economics
Weltwirtschaftliches Archiv / Christian-Albrechts Universität Kiel. Institut für Weltwirtschaft. - Tübingen
, p. 510-540
This study examines the features and determinants of Chinese intraindustry trade during the 19922001 transition period for 50 of Chinas trade partners. We disentangle total intra-industry trade (TIIT) into vertical intraindustry trade (VIIT) vis-`a-vis horizontal intra-industry trade (HIIT), using data at the four-digit SITC level. The findings indicate that Chinese bilateral intraindustry trade, particularly VIIT, increased significantly during this transition period. VIIT appears to be positively related to differences in consumer patterns. HIIT is negatively related to these differences. In addition, we find that FDI has played an important role in determining IIT, especially VIIT. Other significant intra-industry trade drivers are geographical distance, economic size, trade openness and trade composition. Finally, the impact of Chinas liberalization policies and the special role of Hong Kong are demonstrated. We discuss a number of important business and political implications that can be drawn from our findings.