Decomposing China-Japan-U.S. trade: Vertical specialization, ownership, and organizational form

Judith M. Dean, Mary E Lovely, Jesse Mora

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Scopus citations

Abstract

We use the US International Trade Commission's uniquely detailed 1995-2007 Chinese Customs data to better understand the pattern of trade between China and its two largest trading partners, Japan and the United States. Our review finds that only a small share of these flows can be characterized as arm's length, one-way trade in final goods. Instead, we find extensive two-way trade, deep vertical specialization, concentration of trade in computer and communication devices, and a prominent role for foreign-invested enterprises. While these characteristics define both bilateral relationships, important differences between the two pairs do emerge, suggesting that trade costs influence the method by which multinationals choose to integrate their production with China. Consequently, we argue that dialogue on East Asian trade liberalization should include the possibility of significant production gains for the US from its inclusion in any regional agreements.

Original languageEnglish (US)
Title of host publicationInternational Economic Integration and Domestic Performance
PublisherWorld Scientific Publishing Co. Pte Ltd
Pages119-134
Number of pages16
ISBN (Electronic)9789813141094
ISBN (Print)9789813141087
DOIs
StatePublished - Feb 27 2017

Keywords

  • Asia
  • FDI
  • Fragmentation
  • Regional integration
  • Trade

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

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