TABLE OF CONTENT
Abtracti
Table of contentsiv
CHAPTER 1 INTRODUCTION1
1.1 Introduction..........1
1.2 Motivations for this study3
1.3 Research questions and objectives4
1.4 Methodology....................................................................................................4
1.5 Significance of the research5
1.6 Organisation of the thesis6
Chapter 2 Chinas Trade Performances and Trade Reforms8
2.1 Introduction.....................................................................................................8
2.2 Chinas trade balance position8
2.3 Chinas foreign trade9
2.4 Reform of Chinas trade regime18
2.5 Structural changes and external dependence23
2.6 Summary........................................................................................................27
Chapter 3 Review of the Literature29
3.1 Introduction...................................................................................................29
3.2 Theoretical basis for determinants of trade balance31
3.2.1 Productivity and trade balance32
3.2.2 Income and trade balance34
3.2.3 Exchange rate, relative price effects and the balance of trade35
3.2.4 Monetary view of trade balance38
3.3 Empirical research44
3.3.1 Country-specific studies44
3.3.2 Cross-country studies48
3.4 Existing studies on the determinants of Chinas trade balance55
3.4.1 Supply-side explanations55
3.4.2 Relative price effect: the exchange rate56
3.4.3 Demand-side considerations58
3.5 Summary........................................................................................................59
Chapter 4 Research Methodology61
4.1 Research framework61
4.2 Econometric modelling64
4.2.1 The standard model of trade balance64
4.2.2 An extension of the standard model66
4.2.3 Variable construction and data acquisition68
4.3 Estimation strategies69
4.4 Summary........................................................................................................76
Chapter 5 Determinants of Chinas Trade Balance
a Multifaceted Perspective77
5.1Economic factors77
5.1.1 A supply-side explanation77
5.1.2 Relative price effects84
5.1.3 Demand-side considerations: consumption constraints86
5.2 Socio-cultural factors91
5.2.1 Social ideology, social structure and labour supply92
5.2.2 Social networks and FDI inflows93
5.2.3 Demographic structure, social welfare system and saving
behaviour ....................................................................................95
5.2.4 Shanzhai products crowd out imports97
5.3 Institutional factors98
5.3.1 Segmented labour markets98
5.3.2 Strong incentives of local officials to attract inward FDI98
5.3.3 Weak labour trade unions99
5.4 Conclusion.....................................................................................................99
Chapter 6 Effects of Economic Determinants on Chinas Trade Balancean Aggregate Analysis101
6.1 Model specification and methodological procedures101
6.2 Variable construction and data104
6.3 Empirical results...........................................................................................105
6.4 Discussion and conclusion110
Chapter 7 Effects of Economic Determinants on Chinas Trade Balancea Disaggregate Analysis112
7.1 Decomposing Chinas trade balance112
7.1.1 The problem..................................................................................114
7.1.2 Data and adjustment methods114
7.1.3 Adjusted trade balance118
7.2 Model specification121
7.3 Results.........................................................................................................122
7.4 Discussion and conclusion127
Chapter 8 CONCLUSIONS129
8.1 Findings and conclusions129
8.2 Significance and contributions134
8.3 Implications.................................................................................................136
8.4 Limitations and future research138
BIBLIOGRAPHY140