China Spillovers: Aggregate and Firm-Level Evidence

Download or read book China Spillovers: Aggregate and Firm-Level Evidence written by Alexander Copestake and published by International Monetary Fund. This book was released on 2023-10-17 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate the impact of distinct types of slowdowns in China on countries and firms globally. First, we combine a structural vector autoregression framework with a broad-based measure of domestic economic activity in China to distinguish supply versus demand components of Chinese growth. We then use local projection models to assess the responses to such shocks of GDP growth (revenue) in other countries (firms). We find that: (i) both supply and demand slowdowns are associated with substantial declines in partner GDP and firm revenue; (ii) negative spillovers are larger in countries and firms with stronger trade links with China; and (iii) spillovers from Chinese supply shocks are stronger than spillovers from demand shocks, both at the aggregate- and firm-level.