Riikka Nuutilainen (BOFIT) - Shifting Currents: China’s Import Realignment

BOFIT-seminaarit

BOFIT Seminar - Riikka Nuutilainen (BOFIT) - Shifting Currents: China’s Import Realignment

Co-authors: Eeva Kerola (BOFIT) and Tuuli McCully (Bank of Canada)

Abstract
This paper examines recent shifts in China’s import patterns in the context of increased global geoeconomic uncertainty and China’s ambitions to improve its supply chain security. Using detailed trade data and a difference-in-differences approach, we investigate whether China has curtailed its imports from the countries leaning to the West – defined here as those not explicitly supporting China’s claims over Taiwan. Our findings indicate that while there is evidence of a decline in imports from these countries relative to the more East-leaning bloc, the changes are concentrated in a limited number of sectors – primarily raw materials. The results suggest that despite heightened geopolitical tensions and policy rhetoric emphasizing the need to strengthen the resilience of its production networks, China’s realignment of trade flows away from the West-leaners has so far been selective.

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