The Role of China in Asia: Engine, Conduit, or Steamroller?
Jane T. Haltmaier, Shaghil Ahmed, Brahima Coulibaly, Ross KnippenbergSylvain Leduc, Mario Marazzi, and Beth Anne Wilson
This paper assesses China's role in Asia as an independent engine of growth, as a conduit of demand from the industrial countries, and as a competitor for export markets. We provide bothmacroeconomic and microeconomic evidence. The macroeconomic analysis focuses on theimpact of U.S. and Chinese demand on the output of the Asian economies by estimating growthcomovements and VARs. The results suggest an increasing role of China as an independentsource of growth. The microeconomic analysis decomposes trade into basic products, parts andcomponents, and finished goods. We find a large role for parts and components trade consistentwith China playing an important and increasing role as a conduit. We also estimate someregressions that show that China's increasing presence in export markets has had a negativeeffect on exports of some products for some other Asian economies, but not for other products,including those of the important electronic high-technology industry.
: China, engine, conduit, trade, integration, production fragmentation, displacement.
: E32, F10, F40___________________________
Ahmed, Coulibaly, Haltmaier, Leduc, Marazzi, and Wilson are economists in the Division of International Finance of the Federal Reserve System. Knippenberg is a research assistant in the Divisionof International Finance. Mailing address: Division of International Finance, Board of Governors, FederalReserve System, Mail Stop 24, Washington D.C. 20551, USA; email: email@example.com. Tel.:(202)-452-2374; fax: (202)-736-5638. An earlier version of this paper was presented in April 2007 at anIMF conference on the Global Implications of China's Trade, Investment, and Growth. The authorswould like to thank Matthew Bellfy and Scott Weaver for excellent research assistance and Jahangir Aziz,Caroline Freund, Karen Johnson, Michael Leahy, John Schindler, and participants of the IMF workshopfor helpful comments. The views expressed in the paper are those of the authors and do not necessarilyreflect those of the Board of Governors or the Federal Reserve System.