Propagation of changes in demand through international trade: A case study of China

Andritzky, Jochen; Kassner, Bernhard und Reuter, Wolf Heinrich (2019): Propagation of changes in demand through international trade: A case study of China. In: World Economy, Vol. 42, No. 4: pp. 1259-1285

Abstract

China's economy, the second largest in the world, is undergoing a fundamental transition. Its transition from a strong focus on investment and exports towards a larger share of consumption could have important ramifications for China's trading partners. Using China as a case study, this paper deploys a sectoral input-output (IO) analysis to take into account higher-round spillovers from a reduction of import demand or a shift in the composition of the Chinese economy. This approach demonstrates strong indirect effects that exceed by far the initial shock from direct trade links, reflecting China's integration into a closely knit global value chain. The result suggests that the ongoing transition in China will have important effects on the global economy.

• Item Type: Journal article
• Faculties: Economics
• Subjects: 300 Social sciences > 330 Economics
• ISSN: 0378-5920
• Language: English