Research On The Economic Co-movement Between China And Other Main Economies

Economic Cycle Theory has long been the foremost basic theory in economic research. Different schools of economics have put forward their respective theories on different theoretical principles. Against the background of growing economic globalization which strengthens the economic link among nations, the economic cycle theory has been widely used to explain the multilateral relations of international economic fluctuation. However, econometric models established on different economic cycle theories are not quite satisfactory in explaining the practical results of different economic cycle theories, which has lead people's more attention on the research of economic leading indicators.This paper attempts to combine both methods discussed above to study the interaction among nations. Specifically, the composite leading indexes designed by Organization for Economic Cooperation and Development have been chosen as the medium indicators of international economic cycle co-movement.Through dividing eight countries chosed to two kinds:developed economies and emerging economies.The former include American, Japan, Germany and Australia,and the latter include Russian, India, Brazil and SouthAfrica.The sample time-series data from nine nations including China have been divided into two groups according to the year of China's Entry into WTO. With the help of the empirical results from Unit Root Test, Time Difference Correlation Coefficient Test and Granger Causality Test, the economic cycle co-movement between China and the other ten nations has been analyzed comprehensively. Above those results, the interactions between China and each one of the other ten nations have also been discussed respectively, which comes to a conclusion that those ten nations can be divided into four groups with different levels of direct interaction. In the end, different policies and suggestions have been given in detail against the four groups of nations, above which, a new international trade theory has been established on the basis of the balance of mutual direct influence. The new theory provides a lot of specific measures against current global trade unbalance. Those measures have some values for practical operation in order to balance Chinese external economic development in modern times.