Export-led or household consumption-led growth in China: An empirical analysis

Naveed A. SHAIKH, Imtiaz Ahmed PIRZADA, Erum Khushnood Zahid SHAIKH


Abstract. GDP growth dependence on various factors of the country during (1980-2013) 34 years has been estimated. Ordinary Least Squares Technique of regression is applied here. The results are indicative of incidence of devaluation in the Yuan taking real effective and nominal exchange rate. Further, incidence of systematic impact of capital formation on GDP growth is greater than that of the international trade and domestic household consumption expenditure. That signifies the importance of domestic economy in contrast to the general belief of external sector dependence of the Chinese growth.

Keywords. Currency devaluation, GDP growth, Regression.

JEL. F13, F43, O47, E21.


Currency devaluation; GDP growth; Regression.

Full Text:


Amano, R., & van Norden, S. (1998). Oil prices and the rise and fall of the US real exchange rate. Journal of International Money and Finance, 17(2), 299-316. doi. 10.1016/S0261-5606(98)00004-7

Benassy-Quere, A. and Lahreche-Revil, A. (2003). Trade linkages and exchange rates in Asia: The role of China, CEPII, Working Paper, No.2003-21. [Retrieved from].

Bénassy-Quéré, A., Mignon, V., & Penot, A. (2007). China and the relationship between the oil price and the dollar. Energy Policy, 35(11), 5795–5805. doi. 10.1016/j.enpol.2007.05.035

Blanchard, O., & Giavazzi, F. (2006). Rebalancing growth in China: A three-handed approach. China and World Economy, 14(4), 1-20. doi. 10.1111/j.1749-124X.2006.00027.x

Bodman, M.P. (1996). On export-led growth in Australia and Canada: Cointegration, causality and structural stability. Australian Economic Papers, 35(67), 282–299. doi. 10.1111/j.1467-8454.1996.tb00051.x

Bruno, M. (1978). Exchange rates, import costs, and wage-price dynamics. Journal of Political Economy, 86(3), 379-403. doi. 10.1086/260678

Central Economic Conference,. (2004). In Central Economic Work Conference Bejiing December 3 to 5. Biejing. [Retrieved from].

Cerra, V., & Dayal-Gulati, A. (1999). China’s Trade Flows: Changing Price Sensitivities and the Reform Process. IMF Working Paper. [Retrieved from].

Chap, L. (2007). Chapter 1 : China ’ s Consumption Driven Growth Path NICHOLAS R . LARDY Peterson Institute for International Economics Chapter 1: China ’ s Consumption Driven Growth Path *. In I. Sheldon (Ed.), China’s Agricultural Trade: Issues and Prospects (pp. 6–30). Biejing: INternational Agricultural Trade Research Symposium.

Chow, G. C. (1993). Capital Formation and Economic Growth in China. The Quarterly Journal of Economics, 108(3), 809–842. doi. 10.2307/2118409

Dees, S. (2001). The Real Exchange Rate and Types of Trade- Heterogeneity of Trade Behaviours in China. Workshop on China’s Economy by the CEPII. Paris: CEPII.

Dibooglu, S. (1996). Real disturbances, relative prices and PPP. Journal of Macroeconomics, 18(1), 69–87. doi. 10.1016/S0164-0704(96)80004-8

Ding, S., & Knight, J. (2010). Why has China growt so fast? The role of structural change Working Paper Series, No.415. [Retrieved from].

Dutt, S.D., & Ghosh, D. (1996). The Export Growth-economic Growth nexus: A causality analysis. Journal of Developing Areas, 30(2), 167–81.

Edwards, S. (1988). Real and monetary determinants of real exchange rate behaviour: Theory and evidence from developing countries, NBER, Working Paper, No.2721. doi. 10.3386/w2721

Garcia-Herrero, A., & Koivu, T. (2009). China’s exchange rate policy and Asian trade. Economie Rationale, 116, 53-92.

Hardy, N. R. (2006). China : Toward a Consumption-Driven Growth Path. Washington.

Huang, H., & Wang, S. (2004). Exchange rate regimes: China’s experience and choices. China Economic Review, 15(3), 336–342. doi. 10.1016/j.chieco.2004.04.003

Jang, C.J., & Shih, Y.C. (1995). Export-led growth and the Four Little Dragons. The Journal of International Trade & Economic Development, 4(2), 203–215. doi. 10.1080/09638199500000017

Jin, J.C., & Yu, H.E.S. (1996). Export-led growth and the US economy: another look. Applied Economics Letters, 3(5), 341–344. doi. 10.1080/135048596356474

Justin Yifu Lin, F. C. and Z. L. (2002). China and its regions economic growth and reform in Chinese provinces. In M.-F. Renard (Ed.), Economic Growth and Reform in Chinese Provinces (p. 360). Elgaronline. doi. 10.4337/9781840645811.00009

Kwan, A.C.C. & Cotsomitis, J. A. (1991). Economic growth and the expanding export sector: China 1952-1985. International Economic Journal, 5(1), 105–113.

Kwan, A.C.C. and Kwok, B. (1995). Exogeneity and the export-led growth hypothesis: the case of China. Southern Economic Journal, 61(4), 1158–1166. doi. 10.2307/1060747

Lai Yew, W. (2004). The role of domestic demand in the economic growth of Malaysia: a cointegration analysis. International Economic Journal, 18(3), 337-352. doi. 10.1080/1016873042000269993

Marin, D. (1992). Is the export-led hypothesis valid for industrialised countries? Review of Economics and Statistics, 74(4), 678–87. doi. 10.2307/2109382

Marquez, J., & Schindler, J.W. (2006). Exchange-rate effects on China â€TM s trade : An interim report, International Finance Discussion Papers, No.862. [Retrieved from].

Massell B.F., Pearson, S.R., & Fitch, J.B. (1972). Foreign exchange and economic development: An empirical study of selected Latin American countries. Review of Economics and Statistics, 54(2), 208-212. doi. 10.2307/1926287

Palley, T.I. (2012). The rise and fall of export-led growth. Investigacion Economica, 71(280), 141-161. doi. 10.1080/02640410310001641593

Paul, S., & Chowdhury, K. (1995). Export-led growth hypothesis: Some empirical testing. Applied Economics Letters, 2(6), 177–179. doi. 10.1080/135048595357384

People’s Bank of China. (2005). Monetary policy analysis small group. 2005. Report on the Implementation of Monetary Policy 2005Q2, August 4, Beijing. [Retrieved from].

Riezman, R.G., Peter, M.S., & Charles, H.W. (1995). The engine of growth or its handmaiden? A time-series assessment of export-led growth. Empirical Economics, 21(1), 77-110. doi. 10.1007/BF01205495

Rodrik, D. (2008). The real exchange rate and economic growth. Brookings Papers on Economic Activity, 365-440. doi. 10.1353/eca.0.0020

Shahbaz, M. (2009). On nominal and real devaluations relation: An econometric evidence for Pakistan. International Journal of Applied Econometrics and Quantitative Studies, 9(1), 85–108.

Shaikh, N.A. (2011). Trade liberalization, poverty and welfare in Pakistan. International Institute of Development Research and Development POlicy Ruhr University Bochum. [Retrieved from].

Shaikh, N.A., Mangi, R.A., & Soomro, H.J. (2011). Trade liberalization and wage inequality : Conflict of statistical evidence in the reviewed literature. Experience of Latin American and East Asian countries corresponding to the theoretical findings of Heckscher-Ohlin Trade Theorem. Interdisciplinery Journal of Contemporary Research in Business, 3(8), 965–972.

Shaikh, N. A., & Shah, P. (2014). Price effects of trade openness on traded and nontraded goods in Pakistan: An application of H-O-S 2X2X2 Model. International Journal of Economics, Commerce and Management, 2(8), 1-13.

Shaikh, N. A., Shah, P., & Shah, N. (2014). Empirical estimation of GDP determinants, household consumption expenditure and the consumption multiplier in Pakistan (1985-2011). Journal of Economics and Political Economy, 2(2), 317–330. 10.1453/jepe.v2i2.214

Shan, J. (1998). Causality between exports and economic growth : the empirical evidence from Shanghai, 37, 195–202. doi. 10.1111/1467-8454.00015

Sun, P., & Heshmati, A. (2010). International trade and its effects on economic growth in China, Zenado, 2, 18-21. doi. 10.5281/zenodo.17194

Tan, L., & Wei, G. (2010). Sectoral distribution of capital formation and output growth : The cases of China and India. International Journal of Business and Social Science, 2(6), 50–61.

Wong, H. (2008). Exports and domestic demand: Some empirical evidence in ASEAN-5. Labuan Bulletin of International Business and Finance, 6(1), 39–55.

World Bank. (2017). Country Economic Update. [Retrieved from].

Yue, C. (2001). Comparative Advantage , Exchange Rate and Exports in China *. In international conference on chinese economy of “Has China Become A Market Economy?” Clermont-Ferrand France: CERDI, Clermont-Ferrand, France. [Retrieved from].

Zhenhui, X. (1996). On the causality between export growth and GDP growth: An empirical reinvestigation. Review of International Economics, 4(2), 172–184. doi. 10.1111/j.1467-9396.1996.tb00094.x

DOI: http://dx.doi.org/10.1453/jepe.v5i3.1742


  • There are currently no refbacks.


Journal of Economics and Political Economy - J. Econ. Pol. Econ. - JEPE - www.kspjournals.org

ISSN: 2148-8347

Editor: jepe@ksplibrary.org   Secretarial: secretarial@ksplibrary.org   Istanbul - Turkey.

Copyright © KSP Library