The Impact of Chinese Economic Structural Changes on Korea's Export to China

Abstract

In this paper, we examine the structural changes of the Chinese economy and how they affected Korea’s export to China. Focusing on the evolution of China's role in the golbal value chain, we estimate the impact of China's external demand and domestic demand. We also shed light on the effect of compositional changes of China’s GDP on Korea’s exports to China. The results of the VAR analysis suggest that external demand had a significant impact on Korea’s exports to China prior to 2008, while Chinese domestic demand became more important afterwards. Moreover, Chinese investment is the most important in determining Korea’s exports to China and Chinese private consumption is also gaining more relevance in recent periods.