The effect of China's political relations on her international trade

Gregory W. WHITTEN, Xiaoyi DAI, Cheng Ze Simon FAN, Yifan ZHANG

Research output: Working paperWorking paper series

Abstract

The EU's achievements belong to a larger set of greater international, political and economic integration witnessed in the post-World War II era. Though political and economic integration may be thought as mutually re-enforcing, recent events (e.g., Brexit, the 2016 US Presidential Elections) have caused people to think otherwise. China's growing influence on the world has had profound effects on the political and economic decisions of her partner countries. This paper demonstrates that regardless of the severity of the conflict (displeasure at meetings with the Dalai Lama; saber-rattling over disputed territory), political relations affect trade between China and her partners. Warmer relations lead to larger increases (or smaller decreases) in trade while cooler relations have the opposite effect. This finding is robust to estimation methods (pair-specific VARs; a SUR system).
Original languageEnglish
Number of pages28
Publication statusPublished - 7 Jun 2017

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Bibliographical note

This project is joint work with Xiaoyi DAI, (The Chinese University of Hong Kong), Simon FAN, (Lingnan University), and Yifan ZHANG (CUHK).

Keywords

  • international trade
  • conflict
  • political tensions

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