Accounting for the Evolution of China’s Production and Trade Patterns

Hanwei Huang, Jiandong Ju and Vivian Yue

No 19257, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

JEL-codes: D24 E23 E25 F12 F14 L16 (search for similar items in EconPapers)
Date: 2024-07
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