Trade, growth, regions, and the environment: input-output analyses of the Chinese economy

PhD ceremony: Mr. J. Pei, 14.30 uur, Academiegebouw, Broerstraat 5, Groningen

Dissertation: Trade, growth, regions, and the environment: input-output analyses of the Chinese economy

Promotor(s): prof. J. Oosterhaven, prof. H.W.A. Dietzenbacher

Faculty: Economics and Business

A distinct characteristic of China’s exports is that processing trade plays a crucial role. Because processing exports typically require little domestic activity and relatively many imported inputs, the failure to take this specific feature into account will bias the results. By separating ordinary imports and exports from processing trade, this thesis presents some results that shed new light on previous findings.

Specifically, four empirical questions are revisited, (i) the role of exports in explaining imports, (ii) the role of exports in explaining value added, (iii) the role of exports in various regions, and (iv) the effect of exports on emissions. From the viewpoint of methodology, a novel treatment of processing trade has been developed. In addition, a new method is proposed to incorporate distinct features of processing exports and ordinary exports into one consistent framework (which is relevant for other economies that engage in outsourcing).

Certain debates and questions are clarified. For example, is China’s growth sustainable? (Yes, it is in the case of import growth.) Do exports of “high-tech” products contribute much to China’s income growth? (Not as much as one may expect.) Is a large part of China’s emissions due to the large amount of exports that is consumed overseas? (To a much lesser extent than others have reported.) Finally, China’s regions are shown to bear a clear upstream (mainly interior regions) and downstream (mainly coastal regions) nature in production chains.