Whither China? Reform and economic integration among Chinese regions

Shuo Huang, Jan Fidrmuc and Jarko Fidrmuc

China Economic Review, 2015, vol. 33, issue C, 94-110

Abstract: This paper investigates the changing nature of economic integration in China. Specifically, we consider business-cycle synchronization (correlation of demand and supply shocks) among Chinese provinces during the period 1955–2011. We find that the symmetry of supply shocks has declined after the liberalization initiated in 1978. In contrast, the correlation of demand shocks has increased during the same period. We then seek to explain these correlations by relating them to factors that proxy for interprovincial trade and vulnerability of regions to idiosyncratic shocks. Interprovincial trade and similarity in factor endowments tend to make shocks more symmetric. Surprisingly, foreign trade and inward FDI have little effect on the symmetry of shocks.

Keywords: SVAR model; Business cycle synchronization; China; Economic reform (search for similar items in EconPapers)
JEL-codes: E32 F15 H77 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Whither China? Reform and Economic Integration among Chinese Regions (2013)
Working Paper: Whither China? Reform and Economic Integration among Chinese Regions (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:33:y:2015:i:c:p:94-110

DOI: 10.1016/j.chieco.2014.12.007

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