HK Monetary Study: China Still Depends on Exports for Growth

Wednesday, April 15, 2009 7:14
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In the recent released China Economic Issues report, a study by called How Much Do Exports Matter for China’s Growth? (download here) ooks at the impact the export market has on the wider economy.

Unlike many reports that I have seen, and commented on, what I like about this study is that it looked at the externalities to trade. Not simply X amount of TEUs, or that a certain statistical index had increased, but it looked at the wider economy that supports the export economy to draw a wider conclusion.

A conclusion that I believe should compel readers to spend the time to read the 28 page report (5 pages of charts):

Our empirical analyses find the impact of exports on production and employment and the spill-over to domestic demand are positive and statistically significant, and are particularly sizeable for the more export-oriented regions. As these regions account for a large share of the national economy (about 60 per cent), fluctuations in export growth are likely to have a significant impact nation-wide. We find that a 10 percentage-point decline in export growth is likely to reduce the national industrial production growth by around 3 percentage points. This will translate into around 2.5 percentage-point decline in real GDP growth, which is much larger than the direct impact of exports on GDP growth alone.

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