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Why Are China's Exports Special?: The Role of FDI, Regional Trade, and Government Policies

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  • Yan Liang

Abstract

This paper investigates why China is able to achieve a high level of technological sophistication in its exports beyond its current level of development. It concludes that a great portion of the high-tech exports are of the processing and assembly type and produced by foreign-invested enterprises. China's comparative advantage of labor abundance and the Chinese government's foreign direct investment (FDI) policy have encouraged the expansion of FDI-led export in general and FDI-led processing trade in particular. Given the disadvantages of the FDI-led export expansion, reform of the government's FDI and trade policies is needed to improve technological development and to enhance China's production and trade structures.

Suggested Citation

  • Yan Liang, 2008. "Why Are China's Exports Special?: The Role of FDI, Regional Trade, and Government Policies," Chinese Economy, Taylor & Francis Journals, vol. 41(6), pages 99-118, November.
    • Handle: RePEc:mes:chinec:v:41:y:2008:i:6:p:99-118
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    References listed on IDEAS

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    1. Ng, Francis & Yeats, Alexander, 1999. "Production sharing in East Asia : who does what for whom, and why?," Policy Research Working Paper Series 2197, The World Bank.
    2. Guillaume Gaulier & Françoise Lemoine & Deniz Ünal-Kesenci, 2005. "China’s Integration in East Asia: Production Sharing, FDI & High-Tech Trade," Working Papers 2005-09, CEPII research center.
    3. Kim Song Tan & Hoe Ee Khor, 2006. "China's Changing Economic Structure and Implications for Regional Patterns of Trade, Production and Integration," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(6), pages 1-19, November.
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    Cited by:

    1. Jue Wang & Yingqi Wei & Xiaming Liu & Chengang Wang & Hua Lin, 2014. "Simultaneous Impact of the Presence of Foreign MNEs on Indigenous Firms’ Exports and Domestic Sales," Management International Review, Springer, vol. 54(2), pages 195-223, April.
    2. Mahamuda Firoj & Nair Sultana & Sharmina Khanom & Md Harun Ur Rashid & Abeda Sultana, 2023. "Pollution haven hypothesis and the environmental Kuznets curve of Bangladesh: an empirical investigation," Asia-Pacific Journal of Regional Science, Springer, vol. 7(1), pages 197-227, March.
    3. Ying Zhou & Sukanlaya Sawang & Xiaohua Yang, 2016. "Understanding The Regional Innovation Capacity In China After Economic Reforms," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(06), pages 1-36, August.
    4. Hurley, Dene T. & Papanikolaou, Nikolaos, 2021. "Autoregressive Distributed Lag (ARDL) analysis of U.S.-China commodity trade dynamics," The Quarterly Review of Economics and Finance, Elsevier, vol. 81(C), pages 454-467.

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