Assessing China¡¯s Long Term Export and Income Growth in the Global Markets

This paper delves into China¡¯s differential growth in exports with high income and developing countries by focusing on bilateral content of China¡¯s trade and particular exports over the time period 1979-2015. In the last 30 plus years, China has specialized in upstream capital goods and exhibited rapid diversification in consumer goods. Performing causality tests reveals a strong evidence of causality from the export growth of capital goods and consumer non-durable goods to gross domestic product (GDP) per capita. There is also evidence that the causality is bi-directional for consumer durable goods, intermediate goods, and primary non-energy goods with income. Econometric analysis shows a positive and statistical significant relationship between income and export growth of capital goods, consumer non-durable goods, intermediate goods, and primary non-energy goods. Trade openness allows stimulation of growth and efficiency as producers in China are exploiting areas in which they have a comparative advantage.