Asia-Pacific Journal of Accounting & Economics
<< Previous Issue Next Issue >>

Volume 17, Issue No. 3, December 2010
Internationalization and the China Economy: Special Issue for the 2010 APJAE Symposium

  • Chris Milner, Introduction, iii

  • Chris Milner, Meng Lu and Zhihong Yu, On the Economic Content of Factor Content: with Application to China's Trade, 217-234

  • Huiya Chen and Deborah L. Swenson, Managerial Incentives and the Organization of Chinese Processing Trade, 235-252

  • Xiaohua Bao and Larry D. Qiu, Do Technical Barriers to Trade Promote or Restrict Trade? Evidence from China, 253-278

  • Joachim Jarreau and Sandra Poncet, What Chinese Provinces Export Matter for Their Income and Export Performance, 279-298

  • Yang Li and Shin-Yi Chen, The Impact of FDI on the Productivity of Chinese Economic Regions, 299-312

  • Shujie Yao, Dylan Sutherland and Jian Chen, China's Outward FDI and Resource-Seeking Strategy: A Case Study on Chinalco and Rio Tinto, 313-326

  • Announcements, 327-333


On the Economic Content of Factor Content:
with Application to China's Trade

Chris Milnera*, Meng Lua, and Zhihong Yua
aUniversity of Nottingham, UK


This paper reviews the uses and possible applications of alternative factor content measures of China's trade. It distinguishes between measures of the potential (as if China had to produce its imports as well as its exports) and actual (allowing for technological differences between China and trading partners in the production of China's imports and exports) factor content of trade, and explores how the different measures might be used to comment on the gains from trade and on factor market adjustments to trade expansion. It also shows that the different measures affect the predictive power of the H-O-V model (the match between trade in factor services and relative national endowments) when applied to China's trade.

JEL Classifications: F11, F14

Keywords: factor content, trade, China


Managerial Incentives and the Organization of Chinese Processing Trade

Huiya Chena and Deborah L. Swensonb*
aPrice Waterhouse Coopers
bUniversity of California, Davis and NBER


Chinese processing trade has grown considerably as firms adopted a wide array of organizational forms to have their products assembled in China for export. To understand the organization of processing trade we modify Grossman and Helpman's (2004) model of managerial incentives to account for the economic costs associated with firms' input control decisions in China. We examine Chinese processing trade between 1992 and 2003 to test the model's predictions. As predicted by the model, we find that firm productivity is related to processing choices. In addition, the organization of processing trade is found to match tariff levels at the product level.

JEL Classifications: F14, F23, L22

Keywords: Firm heterogeneity, multinational firms, boundaries of the firm


Do Technical Barriers to Trade Promote or Restrict Trade?
Evidence from China

Xiaohua Baoa and Larry D. Qiub*
aShanghai University of Finance and Economics
bUniversity of Hong Kong


The use of technical barriers to trade (TBT) is widespread and has increasing impact on international trade. In contrast to most other trade measures, TBT have both trade promotion and trade restriction effects. Due to their theoretical complexity and data scarcity, TBT have been considered as one of the most difficult non-tariff barriers (NTBs) to quantify. In this paper, we construct a TBT database from 1998-2006 to examine the influence of TBT imposed by China on the country's imports. When using the frequency index, we find that TBT are trade restrictive: a one unit increase in TBT will decrease import value by about 0.8%. However, when the coverage ratio is used, we find that the negative effects of TBT are not statistically significant based on the entire period. However, if the focus is shifted to data from 1998-2001, we find that TBT have trade promotion effects. A one unit increase in TBT will increase import value by about 0.2%. Finally, China's TBT (measured by both frequency index and coverage ratio) are trade restricting for agriculture goods but trade promoting for manufacturing goods.

JEL Classifications: F13

Keywords: non-tariff barriers, technical barriers to trade, frequency index, coverage ratio, China's trade


What Chinese Provinces Export Matter for Their Income and Export Performance

Joachim Jarreaua and Sandra Ponceta*
aParis School of Economics, Université de Paris 1 Panthéon-Sorbonne and CEPII


We estimate the relationship between export sophistication and economic and export performance in China. We confirm Hausmann, Hwang and Rodrik (2007)'s prediction that regions that develop more sophisticated goods grasp greater gains from globalization and grow faster. We find that these gains are limited to export activities undertaken by domestic entities. Direct gains do not appear to derive from foreign entities typically engaged in processing trade even though they are the main contributors to the global upgrading of China's exports.

JEL Classifications: F1, O1, R1

Keywords: Export sophistication, economic growth, outward orientation, China


The Impact of FDI on the Productivity of Chinese Economic Regions

Yang Lia* and Shin-Yi Chena
aNational University of Kaohsiung, Taiwan


This paper, based on the 51 prefecture-level cities of three economic regions (the Pearl River Delta, the Yangtze River Delta, and the BoHai Rim) for the period 2001−2007, found that a city's own FDI can only contribute positively to technology, but not inefficiency. In addition, its influence on frontier and inefficiency are insignificantly different among these economic regions. Furthermore, the contribution of other cities' lagged FDI within the same region on inefficiency in the Pearl River Delta is significantly larger than that in the BoHai Rim and the Yangtze River Delta, which cannot be derived from the data of provincial levels.

JEL Classifications: F21, O33, R11

Keywords: FDI, China, production frontier, efficiency, spillover


China's Outward FDI and Resource-Seeking Strategy:
A Case Study on Chinalco and Rio Tinto

Shujie Yaoa*, Dylan Sutherlanda and Jian Chena
aUniversity of Nottingham


The scale and frequency of foreign direct investment (FDI) in foreign mining companies by China's large state-owned enterprises (SOEs) is still not well explained by existing investment or international business theories. This paper advances and verifies two important theoretical propositions. First, the efforts of China's big businesses to "go global" can be thought of as being part of a national power-building globalisation strategy. Second, facilitated by extended protection from the state, reaching beyond China's national boundaries, China's large SOEs raise investment capital and take risks that their foreign competitors do not. This paper uses Chinalco as a case study to illustrate these propositions.

JEL Classifications: F21, D21, L53

Keywords: OFDI, Chinese big business groups, global financial crisis, globalisation, resourceseeking