Comparing the Networks of Ethnic Japanese and Ethnic Chinese in International Trade

In this paper I re-examined the trade enhancing effects of ethnic Chinese networks, found by Rauch and Trindade (2002), on a newer and extended data set. The effects are estimated by the gravity equation with the product of the population ratio (or absolute number) of the ethnic Chinese in both the importing and exporting countries, and are reaffirmed positive and statistically significant. I also compared the effects of two different ethnic Japanese networks, i.e., the networks of long-term Japanese stayers in foreign countries, and the networks of permanent Japanese residents in foreign countries. It is found that the former has stronger trade enhancing effects than the latter. This shows that the effects of ethnic networks on international trade can be generalized beyond the ethnic Chinese, and the ’cohesiveness’ of the ethnic network matters to the trade enhancing effects of the network.

China's Impact on the Exports of Other Asian Countries: A Note

Despite widespread interest in China's growing trade surplus and its impact on other countries, empirical research in these issues is handicapped by the lack of reliable statistics on aggregate import and export prices. Although researchers estimate the trade volumes of China and other East Asian countries using a variety of surrogate price indices, an inappropriate deflator can give rise to a significant bias in econometric analysis. This paper discusses the potential seriousness of this problem by examining recent studies on the export competition between China and other Asian countries.

Border Trade and Economic Zones on the North-South Economic Corridor: Focusing on the Connecting Points between the Four Countries

The North-South Economic Corridor (NSEC), the road between Bangkok and Kunming, China, including the Laos route (R3B) and the Myanmar route (R3B), has been developed since 1998 following the GMS program. The region covering Yunnan Province in China, Shan State in Myanmar, Northern Laos and Northern Thailand has historical and ethnic closeness, and is a comparatively poor mountainous, boundary area. In the wake of the development of the NSEC, however, the region has started to show signs of change. Consequently, a review is to be carried out concerning the movement of people and cars, border trade and the situation concerning the progress of border economic zones at the five nodal border points in the four countries, and over three routes: R3A, R3B, and the Mekong River route.

Skill distribution and comparative advantage: a comparison of China and India

This paper empirically examines the different comparative advantages of two emerging economic giants, China and India, in relation to the different skill distribution patterns in each country. By utilizing industry export data on China and India from 1983 to 2000, we find that a country with a greater dispersion of skills (i.e., India, especially in the earlier years) has higher exports in industries with shorter production chains, whereas a country with a more equal dispersion of skills (i.e., China, especially in the later years) is found to have higher exports in industries with longer production chains. The causal relationship is fairly robust across different specifications. This empirical evidence supports our assumption that the likely mechanism for these results is the negative impact of low-skilled workers on input quality, which accumulates and becomes larger as the length of production chains and the proportion of low-skilled workers in the economy increase.

Competition of the mechanisms : how Chinese home appliance firms coped with default risk of trade credit?

During the transition period from a planned economy to a market economy in 1990s of China, there was a considerable accrual of deferred payment, and default due to inferior enforcement institutions. This is a very common phenomenon in the transition economies at that time. Interviews with home electronics appliance firms revealed that firms coped with this problem by adjusting their sales mechanisms (found four types), and the benefit of institutions was limited. A theoretical analysis claim that spot and integration are inferior to contracts, a contract with a rebate on volume and prepayment against an exclusive agent can realize the lowest cost and price. The empirical part showed that mechanisms converged into a mechanism with the rebate on volume an against exclusive agent and its price level is the lowest. The competition is the driving force of the convergence of mechanisms and improvement risk management capacity.

New aspects of intra-industry trade in EU countries

Using the HS eight-digit product level trade data of EU countries for the period 1988 – 2010, we analyse Intra-industry trade within EU countries as well as with Eastern European countries and with China. We find the Eastern European countries’ rise up the quality ladder, and by contrast the substantially lower prices of China’s exports to EU countries vis-à-vis China’s imports from them. The contrast between EU trade with the Eastern European countries and with China is present even in very recent years.

China's regional economies and value chains : an interregional input-output analysis

Attempts to understand China’s role in global value chains have often noted the case of Apple's iPhone production, in particular the fact that the value added during the Chinese portion of the iPhone’s supply chain is no more than 4%. However, when we examine the Chinese economy as a whole in global production networks, China’s share in total induced value added by China’s exports of final products to the USA is about 75% in 2005. This leads us to investigate how Chinese value added is created and distributed not only internationally but also domestically. To elucidate the increasing complexity of China’s domestic production networks, this paper focuses on the measure of Domestic Value Chains (DVCs) across regions and their linkages with global markets. By using China’s 1997 and 2007 interregional input-output tables, we can understand in detail the structural changes in domestic trade in terms of value added, as well as the position and degree of participation of different regions within the DVCs.

China's inter-regional spillover of carbon emissions and domestic supply chains

In this study, we apply the inter-regional input–output model to explain the relationship between China’s inter-regional spillover of CO2 emissions and domestic supply chains for 2002 and 2007. Based on this model, we propose alternative indicators such as the trade in CO2 emissions, CO2 emissions in trade, regional trade balances, and comparative advantage of CO2 emissions. The empirical results not only reveal the nature and significance of inter-regional environmental spillover within China’s domestic regions but also demonstrate how CO2 emissions are created and distributed across regions via domestic production networks. The main finding shows that a region’s CO2 emissions depend on not only its intra-regional production technique, energy use efficiency but also its position and participation degree in domestic and global supply chains.

How are global value chains fragmented and extended in China's domestic production networks?

Global value chains are supported not only directly by domestic regions that export goods and services to the world market, but also indirectly by other domestic regions that provide parts, components, and intermediate services to final exporting regions. In order to better understand the nature of a country’s position and degree of participation in global value chains, we need to more fully examine the role of individual domestic regions. Understanding the domestic components of global supply chains is especially important for large developing countries like China and India, where there may be large variations in economic scale and development between domestic regions. This paper proposes a new framework for measuring domestic linkages to global value chains. This framework measures domestic linkages by endogenously embedding a country’s domestic interregional input-output (IO) table in an international IO model. Using this framework, we can more clearly describe how global production is fragmented and extended through linkages across a country’s domestic regions. This framework will also enable us to estimate how value added is created and distributed in both domestic and international segments of global value chains. For examining the validity and usefulness of this new approach, some numerical results are presented and discussed based on the 2007 Chinese interregional IO table, China customs statistics at the provincial level, and World Input-Output Tables (WIOTs).

Spillover effects of TTIP on BRICS economies : a dynamic GVC-based CGE model

This paper uses a GVC (Global Value Chain)-based CGE model to assess the impact of TTIP between the U.S. and the EU on their main trading partners who are mainly engaged at the low end in the division system of global value chains, such as BRICS countries. The simulation results indicate that in general the TTIP would positively impact global trade and economies due to the reduction of both tariff and non-tariff barriers. With great increases in the US–EU bilateral trade, significant economic gains for the U.S. and the EU can be expected. For most BRICS countries, the aggregate exports and GDP suffer small negative impacts from the TTIP, except Brazil, but the inter-country trade within BRICS economies increases due to the substitution effect between the US–EU trade and the imports from BRICS countries when the TTIP commences.

Product quality and intra-industry trade

In this study, we argue that the conventional intra-industry trade (IIT) index does not address the quality issue directly and propose a methodology to make full use of unit-price gap information to deduce quality differences between simultaneously exported and imported products. By applying this measure to German trade data at the eight-digit level, we study the quality improvement of Chinese export goods in its IIT with Germany. We compare the case of China with those of Eastern European countries, which are also major trading partners of Germany. Our results show that the unit-value difference in IIT between Germany and Eastern European countries is clearly narrowing. However, China's export prices to Germany are much lower than Germany's export prices to China, and this gap has not narrowed over the last 23 years. This is at odds with the common perception that China's product quality has improved, as documented by Rodrik (2006) and Schott (2008). Our results support Xu (2010), which argued that incorporating the quality aspect of the exported goods weakens or even eliminates the evidence of the sophistication of Chinese export goods in Rodrik (2006).

Domestic and international border effects

Previous studies in the border-effect literature surprisingly found that domestic border effects are larger than international border effects (e.g., in the United States or Brazil). One interpretation of this result is that these estimates include the effects of producer agglomeration. Therefore, in this study, we estimate those border effects exclusively for transactions for final consumption, in which such agglomeration forces will be weak, in China and Japan. As a result, we found larger international border effects and could not find a significant role for producer agglomeration in the estimates of border effects. We also found that China's accession to the World Trade Organization reduces border effects in trading between China and Japan but does not decrease domestic border effects.

Spatial spillover effects in determining China's regional CO2 emission growth : 2007-2010

This paper proposes an alternative input-output based spatial-structural decomposition analysis to elucidate the role of domestic-regional heterogeneity and interregional spillover effects in determining China's regional CO2 emission growth. Our empirical results based on the 2007 and 2010 Chinese interregional input-output tables show that the changes in most regions' final demand scale, final expenditure structure and export scale give positive spatial spillover effects on other regions' CO2 emission growth, the changes in most regions' consumption and export preference help the reduction of other regions' CO2 emissions, the changes in production technology, and investment preference may give positive or negative impacts on other region's CO2 emission growth through domestic supply chains. For some regions, the aggregate spillover effect from other regions may be larger than the intra-regional effect in determining regional emission growth. All these facts can significantly help better and deeper understanding on the driving forces of China's regional CO2 emission growth, thus can enrich the policy implication concerning a narrow definition of "carbon leakage" through domestic-interregional trade, and relevant political consensus about the responsibility sharing between developed and developing regions inside China.

Dynamics of investment negotiations between China and Japan : the China-Japan-Korea trilateral investment treaty and beyond

The investment agreement relationship between China and Japan is complex. The many intersecting and overlapping agreements can rightly be described as a "noodle bowl of agreements." The 1989 bilateral investment treaty (BIT) between China and Japan still stands. Japan can also free-ride on the negotiation outcome of China's BITs and free trade agreements (FTAs) with other countries by using the most-favored-nation (MFN) provision in the 1989 China-Japan BIT, which does not contain regional economic integration organization (REIO) exception rules. However, because the China-Japan BIT does not have investor-state dispute settlement (ISDS), it may face implementation problems. The China-Japan-Korea trilateral investment treaty (CJK TIT), in force since 2014, made improvements upon the 1989 BIT, but Japan is not entirely satisfied with the outcome. For Japan, pre-establishment national treatment (NT) and prohibition of various types of performance requirements are the most important negotiation items, but the CJK TIT insufficiently addressed those problems. Moreover, because the CJK TIT has MFN provisions with an REIO exception rule, better access to investment markets brought about by future FTAs such as the China-Korea FTA and the EU-China FTA cannot be imported into CJK TIT. Hence, in the long run, Japan needs to pursue an FTA investment chapter with China that covers both MFN and ISDS.