China – growth engine or obstacle for Asian developing economies?

Over the last 30 years, changes in the East and Southeast Asian region have been fast and deep. China is the growth engine of a new regional production system which in turn has provoked changes in many other parts of the world. For its own fast growth, China has relied heavily on importing intermediate products from neighbouring countries, but this is changing with China now producing more of its own inputs and occupying also the more skill intensive parts of the value chain. Some countries in the region trade relatively little with China, but the trade itself may undermine long-term growth prospects. The paper analyses these trade impacts, distinguishing between groups of countries and products. It shows that China’s growth augments opportunities for some but pulls others into a race to the bottom.