Research On China's Terms Of Trade And Immiserizing Growth

For the last twenty years, China has gained a great increase on the amount of international trade. Meanwhile, China's terms of trade has kept getting worse. According to the definition of Immisering Growth(Bhagwati,1958), it is probable that China is suffering form Immisering Growth. Indeed ,for recent years, there are some papers on this problem in China, however, most of these paper just focused on discussing about terms of trade, taking the two different phenomenon as equal. But according to the theoiry of international trade, Immisering Growth is a phenomenon of welfare. Only can one draw the conclusion when he has acctually examine the changes of welfare.To begin with, the paper calculate China's terms of trade(from 1981 to 2005) so as to find out the trend of changes. Then a mathmetic model is set up to generate the influncing factors. With terms of trade getting worse, one contury will suffer from a loss on welfare, however, it does not always equal to "Immisering Growth" itself. For a further measurement, the paper imploys several variables(such as qGDP) and methods(such as Cointegration), finally get an Error Correction Model. Utilizing the Weak Axiom of Revealed Preference and the method of Sawada(2006), the result can be shown that China has not suffered from Immisering Growth for these years(form 1995 to 2005).