The Influence of “Made in China” on the Great Moderation of the Global Economy：An Empirical Test Based on Value Chains*

We have collected data on China’s 22 main trading partners for 1984-2012 and used System GMM to study the influence of “Made in China” on the “Great Moderation” of the global economy. Our research shows that although trade scale, real effective exchange rate, oil prices, fixed capital investment and other variables have significantly expanded global economic volatility, “Made in China” has markedly restrained output growth rate fluctuations in countries around the world and price fluctuations in developed countries, helping the global economy develop with “high growth, low volatility.” “Made in China” is a long-term variable in the context of the global value chain. China needs to take advantage of global value chain restructuring to further upgrade and develop processing and manufacturing industry and expand its presence in the international market. It could choose to adopt a “mirror strategy” and launch trade sanctions targeting counterpart industries or enterprises to counter irrational trade sanctions from the developed countries. At the same time, however, it is important for China to make its own contribution to improve global economic governance and building a new international economic order in the era of global value chains by strengthening its policy coordination with other countries.     

Should trade barriers be phased-out slowly? A case study of North America

A dynamic computable general is developed to analyze the effects of different phase-in rates of the Canada–US and North American Free Trade Agreements on their member countries, as well as the impact on the rest of their trading partners. The model is based on intertemporal optimization behavior of households and firms with fully specified countries/regions in which all prices and quantities are endogenously determined. I show that the size and the distribution of the welfare gains from these trade agreements are quite sensitive to the speed of trade liberalization. In particular, I find as a general rule that smaller member countries are better off under a more rapid phase-out of trade barriers, while larger member countries/regions are better off under a slower phase-out.     

The US–China trade war and Phase One agreement

The Trump administration changed US trade policy toward China in ways that will take years for researchers to sort out. This paper makes four specific contributions to that research agenda. The first is to carefully mark the timing, definitions, and scale of the products subject to the tariff changes affecting US–China trade from January 20, 2017 through January 20, 2021. One result was each country increasing its average duty on the other to rates of roughly 20 percent, with the new tariffs and counter-tariffs covering more than 50 percent of bilateral trade. The second contribution is to highlight two additional channels through which bilateral tariffs changed during this period that received less research attention. One tariff change is through product exclusions, another is trade remedy policies of antidumping and countervailing duties. The third contribution is to provide an initial exploration into why China fell more than 40 percent short of meeting the goods purchase commitments set out under the first year of the Phase One agreement. The last contribution is to consider additional trade policy actions—involving forced labor, export controls for reasons of national security or human rights, and reclassification of trade with Hong Kong—likely to affect US–China trade beyond the Trump administration.     

The Value of the WTO

Recent developments in global trade include actions by major global traders that lie outside the norms of behaviour of the World Trade Organization (WTO) over the last 20 years. Member frustrations with the slow pace of negotiations and concerns about strategies and behaviours of other members approaches to trade and economic development have created unprecedented stresses on a system of rules and commitments that have long encouraged global trade growth and increased economic integration. In this paper we explore the value of the multilateral trading system, particularly the WTO, and emphasize that the value goes well beyond crucial achievements such as tariff reductions and the prevention of a global trade war, but is also found in increased certainty and transparency. The WTO reduces uncertainty about trade policy thus promoting trade and investment. Membership of the WTO locks in beneficial reform and has a public good nature also fostering trade with non-members. We discuss the importance of the WTO as a multilateral forum to negotiate rules on segments of trade expected to grow in the future such as services and digital trade. We describe how the history of negotiations in the WTO provides useful insights for negotiations on such future topics.     

Multilateralism under threat: Causes,impact, and the policy debate on government intervention in trade

Several forces fostered trade liberalization since the end of World War II. Production and trade interacted quite favorably during the period. In the past quarter century real income in the OECD economies grew at almost 4% yearly, while the volume of export increased by almost 7 percent. However, in the first half of the 1980s, the chemistry of the situation seems to have changed as protectionist tendencies developed almost everywhere in the world. The very same multilateral nature of the world trading system is under threat, as illiberal discriminatory practices are being implemented bilaterally and, even more often, unilaterally. What are the forces at play to increase the pressure towards government intervention in trade? The paper reviews (i) macroeconomic issues and policy situations, as well as (ii) structural issues concerning the working of the economic systems of industrial countries. The pressure for trade intervention in the U.S. is addressed separately with respect to Europe, given the structural and cyclical differences between the two economies The case of Japan is dealt with with reference to the alleged interrelation between Japan's international competitiveness and its macroeconomic policies. Matters of more direct concern to the LDCs are covered at the end of the paper, with emphasis placed on the restructuring process under way in response to, and as a consequence of, the external debt. The paper ends with a recommendation to all countries to make efforts to preserve and strengthen the multilateral and liberal foundations of the international trading system.     

The Eurasian Economic Union: Development Prospects and Possible Obstacles

This article analyzes the development prospects and problems for the Eurasian Economic Union (EAEU). It examines issues of integration within the EAEU, as well as interactions with other countries, both CIS (Commonwealth of Independent States) and non-CIS. The main problem of integration within the EAEU is the dominance of redistributive motives over productive ones. This article assesses the extent of Russian oil and gas transfers to EAEU partners and the impact of tax maneuvers on their size. It shows that the creation of mechanisms for redistributing profits within the EAEU will allow a positive economic effect to materialize from free trade agreements with non-CIS countries. The article assesses the risks for the EAEU related to Russia’s introduction of a unilateral ban on food imports from countries on the sanctions list and to the possible establishment of tariffs on trade with Ukraine.     

越南加入WTO后经贸形势及前景

2007年1月，越南正式成为世贸组织的成员国，其经济日益融入世界经济。随着世界市场组织形式和贸易方式的变化，全球化趋势越来越明显，越南加入WTO后其贸易获得发展良机，缩短了与世界经济的距离。同时，碰到的问题也是前所未有的。特别是2008年初，遭到通货膨胀打击，导致经济发展减缓。但随着世界经济的好转，越南贸易也将在2009年随着国内经济的复苏而出现较大发展。     

“碳关税”对中国经济的潜在影响

近年来,一些发达国家以应对气候变化为由,提出对进口的碳排放密集型产品征收特别的CO2排放关税,并将"碳贸易限制措施"扩大为"碳关税"壁垒。"碳关税"的开征必然对我国经济、出口贸易造成严重冲击。因此,我们应该积极主动参与相关国际规则的制定,优化出口贸易结构,加强低碳技术创新,实现向低碳经济的转型,以便充分地应对"碳关税"壁垒。     

Cross-Atlantic implications of the new US policy mix

This paper will assess implications of shifting policy mix in the US for global imbalances and adjustment, with a focus on the euro area, using the European Commission’s QUEST model. Following early market euphoria after the elections on the account of expected “decisive” pro-market policies, uncertainty regarding the composition and timing of the new administration's economic policies has been the norm. Early proposals included a substantial fiscal stimulus which, combined with a tightening monetary stance, was expected to drive up long-run interest rates and the dollar, leading to widening global imbalances and potential instability. Today the expansionary impact of the fiscal plans is the subject of a heated debate while monetary policy continues to tighten steadily and risks related to a protectionist trade agenda remain pronounced. Contrary to initial expectations, real interest rates and the dollar have weakened, while global imbalances persist. Addressing policy and structural needs in the US – and abroad – is a necessary condition to rein in global imbalances. In this context, this paper will discuss the role of the G20/G7 to promote a coordinated policy approach and in particular to what extent the G20/G7 can deal with the transition from crisis management to the balancing of heterogeneous preferences among the policy makers to promote global growth and stability.     

The impact of US fresh milk production standards on dairy trade

We examine the impact of proposed changes in US legislation to allow greater use of concentrated dairy products when producing fresh milk commodities. Although this change will allow dairy producers to partially circumvent high tariff-rate quotas (TRQs) for fresh milk products, changes in dairy production and trade are small, reflecting limited use of concentrated dairy products as inputs to fresh milk products. We also show that, at the global level, high trade barriers on other dairy commodities do not have a significant impact on trade in concentrated milk products. We conclude that trade negotiations should focus on the removal of tariffs and TRQs.     

Protectionism: An analysis from project LINK

The LINK system of world trade is used to examine present tendencies toward protectionism. In protectionist scenarios we increase the prices of manufactured imports into 13 LINK-OECD countries by 5, 10, and 20 percent respectively, for 1978–1979. If a country's import equations do not depend significantly on relative price, we impose corresponding quantitative import restrictions of 5, 10, and 20 percent. Smaller OECD countries, developing countries, and socialist countries are assumed to be nonprotectionist in these scenarios. The discrepancies between the values of leading variables in the protectionist scenarios and in a baseline case show the effects of the different degrees of protectionism assumed. The results describe and validate Adam Smith's principles of the gains from free trade.     

Globalization: Country and company interests in conflict

Globalization has brought about fundamental change. But, the same theory that shows that free trade is beneficial also shows that globalization can be harmful to at least one of the trading countries. Moreover, with globalization, the interests of a country and its companies may diverge. In this paper, we examine free trade in a globalizing world and identify the key policy issues that economists and industrial leaders, alike, must address in today's interdependent world.     

Transmissions of real economic shocks across the Pacific Rim economies

We use Asian International Input–Output Tables 1995 in measuring trade dependencies of 10 Pacific Rim economies within a regional general equilibrium model. We develop two sets of metrics in measuring the trade dependencies of the economies. First, we use final demand elasticity of exports in measuring the sensitivities of the economies in the model to autonomous changes in the final demand in any other economy in the region. Second, we use a final-demand-weighted index of export elasticities that are induced by variations in the final demand vector of any economy in the model as indicators of the strength of the shocks transmitted across countries.The estimated coefficients have important policy implications. First, these coefficients identify the most vulnerable sectors of the economies in terms of the export/import dependency. Second, these coefficients may be readily used in bilateral and regional trade negotiations. Using these coefficients, policy makers can provide mutual trade concessions in dampening the effects of real and financial shocks transmitted from the trading partners.     

区域经济组织对全球贸易体制的挤出--基于中国视角的验证与对策

区域经济组织的兴起给多边贸易体制带来了一系列的挑战和冲击，其基本原因在于区域经济组织带来的积极影响以及多边贸易体制自身的消极因素，这些都为区域经济组织对多边贸易体制形成挤出效应埋下了隐患。这在现有所谓社会网络模型中得到充分验证。因此协调好二者之间的矛盾与冲突对于中国的贸易自由化和可持续发展就有着重大的意义。自从加入WTO以来，中国经济实力和贸易水平实现大幅度提升，中国有义务也有能力趋利避害，谋求消化区域经济组织对现有全球贸易体制的挤出效应，扭转两者零和博弈的内耗，进而追求自身与全球的经济贸易利益持续健康发展。     

Commodity prices and the world distribution of income

Some advocates of a new international economic order recommend raising prices of commodities exported by developing countries as a means of reducing the inequality of world income distribution. A simulation model using commodity trade data and income distribution data for 68 industrial and developing countries examines this policy alternative. Initial data compilation reveals that internal inequality is as important as international: The world income share of the poorest 40% of people would be twice as high in the absence of intracountry inequality. Calculations using actual price experience in the “great inflation” of 1972–1975 show that despite the large relative price changes for some commodities (especially oil), these changes left the world size distribution of income virtually unchanged. Separate policy simulations show that even a quadrupling of the price of ali “equalizing” commodities (those mainly exported by LDCs) would leave the size distribution of world income practically unaltered (even under optimistic assumptions about intracountry distributional incidence), although some individual LDCs would gain. Increasing commodity prices therefore appears to be an ineffective means of increasing international equity, quite apart from questions about the feasibility of cartels or commodity agreements.     

An international trade model to capture linkages among supply-constrained economies

The development of a country's domestic and international markets depends on its own actions as much as on those of its trading partners. The study of market linkages is thus vital for policy making. Borrowing from the conceptual framework of Leontief's input-output analysis and from the national accounts equation, this paper presents a new model to calculate multilateral trade multipliers while minimizing data requirements. The novelty of the approach consists in the column-wise (supply-oriented) normalization of trade as opposed to the row-wise (demand-oriented) normalization that prevails in the literature. The explanatory power of the model has been successfully tested on data that refer to 1973–1974. Divergence from reality inevitably reflects the great fluidity that characterized trade during that period. Although most successful when applied to trade among supply-oriented economies (such as those of socialist or developing countries), at present empirical tests have been run only for a handful of OECD and OPEC countries.     

WTO贸易政策对中国林产品贸易政策的影响

以世界贸易组织原则为核心的国际贸易政策越来越多地影响着各种贸易行为和贸易政策制定。林产品贸易是一个国家国际贸易总和的一部分 ,对许多发展中国家来说 ,林产品的进出口蕴藏着极有经济价值的潜能并将为其服务。为适应多边自由贸易体制 ,阐述了WTO贸易政策的一般规范与扩展 ,分析了其对中国林产品贸易政策的影响以及我国林产品贸易面对WTO的贸易政策所应采取的战略对策。     

Macroeconomic impacts of Chinese currency appreciation on China and the Rest of World: A global CGE analysis

This paper analyzes the ex-ante short-term impacts of the Chinese RMB appreciation on the Chinese and world economy, using a novel approach of modeling nominal exchange rate adjustment in the GTAP, a global CGE model. Scenario results show that Chinese economy will be affected negatively, with lower real GDP, lower employment rates, and a decline in the trade surplus. Chinese currency appreciation has positive impact on the GDP of the major countries and regions, although by a small margin. With higher Chinese exchange rate, trade balance for other trading partner countries improves with the exception of the U.S.     

North-South relations: Alternative policy simulations for the world economy in the 1980s

This article makes projections of the world economy in the North-South context for the period 1981–1990 using a latest global version of a macroeconomic model named FUGI-GNEM type IV 011–62. The model classifies the world into 62 countries/regions, where the North-South interdependence is incorporated into an integral part of the world economy through international economic linkages. Based on alternative simulations, the author presents future images of the North-South interdependent world economy through changes in economic growth rates, employment, wages, prices, money supply, interest rates, public finance, trade, capital movement, international balance of payments, foreign exchange rates, etc., in each country or region. The model forecasts that the real economic growth of the developing countries as a whole in the 1980s will likely be around 4%–7% annual rate according to alternative policy scenarios.     

Trade, education, and innovation: Prospects for the U.S. economy

This paper examines international trade issues as vital indicators of the economic prospects of the United States and other developed economies. In particular, it challenges misuses of the doctrine of mutual gains from trade and instead argues that comparative advantage does not guarantee increases in benefits to both trading partners—especially when one partner seeks to distort the market mechanism in its favor. In the face of such mercantilist or protectionist practices, efforts to advance innovation, without retaining manufacturing jobs, will not ensure continued prosperity, as the number of jobs entailed in the invention process is small compared with the number of jobs associated with manufacturing an innovative product for mass consumption. These matters call for the urgent rethinking of trade policy by the United States and other developed nations, if they are to balance their imports and exports and ensure continued economic growth.