Processing Trade and Economic Growth: Evidence from China

摘要

Presently, processing trade has become China's major trade method. In order to make clear the relationship between processing trade and China's economic growth, this paper, based on China's statistical data from 1985 to 2007, by employing co-integration theory, Granger causality test and error correction model (ECM), respectively investigates the relationship between processing trade import, processing trade export and economic growth. The empirical result denotes that there exists unilateral Granger causality relationship between processing trade import and economic growth. Processing trade import influences the growth of GDP. For a short period, processing trade import and processing trade export both spur the growth of GDP, but the impact is comparatively low; for a long period, processing trade import remarkably promotes the growth of GDP, while processing trade export restricts the growth of GDP.