Accounting for the evolution of China's production and trade patterns

Hanwei Huang, Jiandong Ju and Vivian Yue

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper studies the evolution of China's production and trade patterns during its integration into the global economy. We document and explain new facts concerning changes in production and exports at the industry and firm levels using microdata and a quantitative Ricardian and Heckscher-Ohlin model with heterogeneous firms. Counterfactual simulations reveal that capital deepening made China's production and exports more capital-intensive, although labor-biased productivity growth acted as a counterforce. Consistent with the data, our model demonstrates that China's trade openness peaked around the mid-2000s and fell until the 2020s, while the world's exposure to Chinese exports rose continuously.

Keywords: production and trade patterns; comparative advantage; heterogeneous firm; trade liberalization; capital deepening; productivity growth; trade openness; China shock (search for similar items in EconPapers)
Date: 2024-05-01
New Economics Papers: this item is included in nep-cna
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Related works:
Working Paper: Accounting for the evolution of China's production and trade patterns (2024)
Working Paper: Accounting for the Evolution of China’s Production and Trade Patterns (2024)
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