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What does the Chinese market need? An empirical study of the determinants of Chinese imports, 1996--2008

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Listed:
  • Jianhong Zhang
  • Chaohong Zhou
  • Arjen van Witteloostuijn
  • Haico Ebbers

Abstract

This study provides an in-depth analysis of the determinants of import demand in China through a multilevel approach. Using disaggregated data over 1996--2008 and a dynamic panel model, we find that the Chinese import market is predominantly characterized by quality competition. However, the nature of the competition varies across different industries. In line with theory, quality plays an important role in industries that are characterized by the potential for quality improvement and product differentiation, whereas price is key in industries in which quality and product differences are rather small. Moreover, private consumption expenditure is more influential than other categories of expenditures. Additionally, variables that can influence the relative price of import products, such as the exchange rate, tariffs and the domestic price index, also have an impact on import demand.

Suggested Citation

  • Jianhong Zhang & Chaohong Zhou & Arjen van Witteloostuijn & Haico Ebbers, 2013. "What does the Chinese market need? An empirical study of the determinants of Chinese imports, 1996--2008," Asia Pacific Business Review, Taylor & Francis Journals, vol. 19(3), pages 402-420, July.
    • Handle: RePEc:taf:apbizr:v:19:y:2013:i:3:p:402-420
    DOI: 10.1080/13602381.2012.699249
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    References listed on IDEAS

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    1. Xing, Yuqing, 2011. "Processing Trade, Exchange Rates, and the People’s Republic of China’s Bilateral Trade Balances," ADBI Working Papers 270, Asian Development Bank Institute.
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    3. Richard Baldwin & James Harrigan, 2011. "Zeros, Quality, and Space: Trade Theory and Trade Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 60-88, May.
    4. Xing, Yuqing, 2012. "Processing trade, exchange rates and China's bilateral trade balances," Journal of Asian Economics, Elsevier, vol. 23(5), pages 540-547.
    5. Yuqing Xing, 2011. "Processing Trade, Exchange Rates, and the People’s Republic of China’s Bilateral Trade Balances," Macroeconomics Working Papers 23266, East Asian Bureau of Economic Research.
    6. Carmen M. Reinhart, 1995. "Devaluation, Relative Prices, and International Trade: Evidence from Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 290-312, June.
    7. Li Cui & Mr. Murtaza H Syed, 2007. "The Shifting Structure of China’s Trade and Production," IMF Working Papers 2007/214, International Monetary Fund.
    8. Fernandes, Ana M. & Paunov, Caroline, 2009. "Does tougher import competition foster product quality upgrading ?," Policy Research Working Paper Series 4894, The World Bank.
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    Cited by:

    1. Jianhong Zhang & Désirée van Gorp & Haico Ebbers, 2019. "What Determines Trade Between China And India During The Recession Of 2008–2012?," Contemporary Economic Policy, Western Economic Association International, vol. 37(2), pages 389-406, April.
    2. Gozgor, Giray, 2014. "Aggregated and disaggregated import demand in China: An empirical study," Economic Modelling, Elsevier, vol. 43(C), pages 1-8.

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