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Exploring China’s Role in the Global Economy: Financial Crisis, Adjustment, and Global Prosperity
Linyue Li
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DOI:10.17265/1548-6591/2016.07.001
Central University of Finance and Economics, Beijing, China
The purpose of this paper is to update China’s economic role in the global economy, under the background of the global financial crisis and the rising impact of emerging Asian economies, by investigating the evolution and the nature of macroeconomic interdependence between China and other major players in the world economy, such as other emerging Asia and major industrial countries. To discuss China’s economic relationship with other emerging Asian countries and with major industrial countries, such as G7, changes in inter-regional and intra-regional economic linkages of trade and financial markets through various business cycle co-movements between emerging Asia and major industrial countries (G7 economies) are reviewed in the existing literature. Since it would be interesting to investigate the direction and magnitude of growth spillovers and business cycle synchronization between China and other major players in the world economy, a four-variable Vector Auto-Regression (VAR) model is employed to assess the evolution of macroeconomic interdependence and to measure bi-directional macroeconomic impacts between China and other major players in the global economy. Country specific models for Hong Kong, South Korea, Thailand, Japan, and the United States are analyzed. The question on how China will contribute to battling the crisis and continue to play a crucial role in stabilizing the future world economy is the main focus. This paper provides some thoughts for further study of China’s role in the global economy.
China’s role, global aggregate, regional aggregate, financial crisis
Journal of US-China Public Administration, July 2016, Vol. 13, No. 7, 431-441
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