Studies On The Contagion Of International Financial Crisis To China’s International Trade

Along with the evaluation of economic globalization and financial integrationsince the1990s, financial crisis breaks out more frequently. Researchers have come toan common understanding that the contagion effects and destructions of the financialcrisis is more and more stronger and the influences of the financial crisis is more andmore widespread. The financial crisis conducts mainly through the monsoons effect,trading channels, financial channels and pure contagion effects, and the financialchannels and trading channels are the most important contagion channels. Since thereform and opening up in the context of economic globalization, the ralationshipbetween China’s economy and world’s economy becomes closer and closer.WhileChina’s economy benefits from economic globalization, also facing to greaterinternational financial risks. As the openness of China’s financial market is not deep,the Asian financial crisis and the U.S. subprime mortgage crisis through financialchannels have limited impact on China’s economy. However our country isexport-oriented economy, the Asian financial crisis and the U.S. subprime mortgagecrisis affect China’s economy through trade channels firstly,China’s international tradeis also the macroeconomic level which affected by the two crisises most seriously.Therefore, in the post-crisis era with rapidly changing economic situation, analyzingthe associations between the international financial crisis and China’s internationaltrade，researching on the influences and shocks of the international financial crisis onChina’s international trade, investigating the mechanism and its influential factors offinancial crisis contagion to China’s international trade and exploring the vulnerabilityof China’s international trade facing to international financial crisis are of greatsignificance for enhancing the anti-risk ability of our country and promoting thedevelopment of China’s economy.This paper absorbs domestic and foreign advanced research results and researcheson the contagion of financial crisis to China’s international trade from the perspective of trade type according to the financial crisis theory,financial cisis contagion theoryand international trade theory.This paper constructs dynamic factor model for the totalexports and imports of general trade and processing trade to extract the common factorrepresenting the synchronous changes of these four variables together and the specificfactors representing fluctuations of their own characteristics, uses econometricapproach such as the VAR model, Granger causality test, multiple causality tests andimpulse response analysis to research on the income effects and price effects of thecontagion of the international financial crisis to China’s international trade empirically,gives a comparative study on the contagion mechanism and influences of the Asianfinancial crisis and the U.S. subprime mortgage crisis on China’s international tradeand provides countermeasures for China’s foreign trade to prevent and cope with theinternational financial crisis better.The following contents will be stated in the paper:ChaperⅠis the introduction about the research background and significnce, theoverall research ideas and main contents through reviewing and commenting ondomestic and foreign advanced research results about financial crisis contagionespecially the congation through trade channels, and the research methods andinnovations.ChaperⅡ is about contemporary financial crisis theory. In this chapter we explainfinancial crisis, the appearance of financial crisis and four-generation financial crisismodels in detail. The content of this chapter establishs the basis for the followingresearch.Chaper Ⅲ is about the the contagion mechanism of the financial crisis.In thischaper we research on the contagion mechanism of the financial crisis on the basis ofchaper Ⅱ systematically and investigate the causes and contagion mechanisms of theAsian financial crisis and the U.S. subprime mortgage crisis.This chapter establishs thebasis for the subsequent empirical study.ChaperⅣ is about the empirical research on the contagion of the U.S. subprimemortgage crisis to China’s international trade, this chaper is the main focus of thisstudy. In this chaper we construct dynamic factor model using the total export andimport volume of the general trade and processing trade during the U.S. subprimemortgage crisis from the perspective of trade type to extract the common factor representing the synchronous changes of these four variables together and the specificfactors representing fluctuations of their own characteristics.We utilize Grangercausality test to test the existence of the income effect and price effect of the contagionof the U.S. subprime mortgage crisis to China’s international trade and explore theheterogeneity when China’s general trade and processing trade facing to the U.S.subprime mortgage showed.We also utilize the VAR model to analyze the dynamicassociations between international financial crisis and China’s international trade.ChaperⅤis about the comparative study on the contagions of the Asian financialcrisis and the U.S.subprime mortgage crisis to China’s international trade. In thischapter we also build dynamic factor model for China’s general trade and processingtrade during the Asian financial crisis firstly. Accordingly, we utilize Granger causalitytest to test the existence of the contagion of the Asian financial crisis to China’sinternational trade.We also construct multiple causality tests to compare theimportanceof income effect and price effect of the Asian financial crisis and the U.S.subprime mortgage crisis respectively to investigate the factors affecting the congationof international crisis on China’s foreign trade and explore the vulnerability of China’sinternational trade facing to international financial crisis.Chaper Ⅵ is about the countermeasures for China’s international trade to guardagainst international financial crisis on the base of above theoretical and empiricalresearch.The results and conclusions are as follows:First, through systematic research on the financial crisis contagion mechanism,this paper points out that financial crisis spreads through trade channels, financialchannels, monsoon effects and the pure contagion effects;Revenue,exchange rate andtrade policy play an important role in the financial crisis contagion through tradechannels. Then, we take the the Asian financial crisis and the U.S. subprime mortgagecrisis as an example to investigate the causes and contagion mechanism of these twofinancial crisis and conclude that the contagion of these two financial ciris is the resultsof the joint action of multiple contagion mechanisms.Second, this paper utilizes dynamic factor model, VAR model, Granger causalitytest, multiple causality tests and impulse response analysis to empirically research onthe contagion of the Aisan financial crisis and the U.S. subprime mortgage crisis to China’s international trade and draws the following conclusions:(1)the U.S. subprimemortgage crisis has serious negative impacts on China’s international trade,and theincome effect and the price effect of the U.S. subprime mortgage crisis’ contagion toChina’s international trade is very significant.According to the multiple causality testswe constructed,the price effect is more important to China’s international tradecomparing to the income effect;(2)The general trade and the processing trade behaviordifferently against the U.S. subprime mortgage crisis, the general trade is sensitive tothe fluctuation of the foreign demand, the processing trade is sensitive to thefluctuation of the exchange rate;(3) The Asia financial crisis has serious negativeimpacts on China’s international trade too.However because the major trade rival ofChina in the southeast Asian has been particularly affected by the Asian financial crisisand the impact of the Asian financial crisis on the China’s major tade partner, asAmerican and European Union is weaker, the price effect is significant but the incomeeffect is not significant during the Asian financial crisis.Third, through the comparision between the contagion of the Aisa financial crisisand the U.S. subprime mortgage crisis to China’s international trade, we draw thefollowing conclusions:(1) Although the U.S. subprime mortgage crisis and the Aisanfinancial crisis have negative impact on China’s international trade,the mechanisms isquite different.The contagion mechanisms of the Asian financial crisis to China’sinternational trade is mainly through indirect multilateral trade,while the contagionmechanisms of the U.S.subprime mortgage crisis to China’s international trade isthrough direct bilateral trade and indirect multilateral trade simultaneously;(2)Compared with external demand,the exchange rate has always been the importantcontagious fators for the contagion of international financial crisis to China’sinternational trade.Therefore,the processing trade focusing on the low value-added,low-tech products increases the vulnerability of China’s international trade.After theU.S.subprime mortgage crisis,it is difficult for China’s international trade to maintainthe low price advantange.In order to cope with financial crisis better,China shouldtransforme the trade development mode, evolve the import and export structure,improve the import and export policy and speed up the international ization of RMB.The study of this paper is of great theoretical significance for enriching andimproving the financial crisis contagion theory and strengthening the research depth inthe study about the financial crisis contagion to China’s trade. In the context of post-crisis period, our study is of great practical significance for improving anti-riskability of China’s international trade.