Table of Contents

Handbook on Trade and Development

Handbook on Trade and Development

Edited by Oliver Morrissey, Ricardo Lopez and Kishor Sharma

This Handbook comprehensively explores the complex relationships between trade and economic performance in developing countries. Insightful chapters cover issues such as trade, growth and poverty reduction; trade costs, facilitation and preferences; sub-Saharan Africa’s reliance on trade in primary commodities, informal cross-border trade, agglomeration and firm exporting; imported technology, exchange rates and the impact of firm exporting; the increasing importance of China in world trade and links between FDI and trade. This Handbook provides an essential overview of trade issues facing developing countries.

Chapter 20: Exports and FDI in China

Jing Zhang and Xufei Zhang

Subjects: development studies, development economics, economics and finance, development economics, international economics


Since it adopted an open-door policy and launched economic reforms in 1978, China has experienced spectacular growth in its GDP and exports. China has become the world’s largest exporter since 2009 and its exports have grown much faster than imports, resulting in a huge trade surplus over the years. Meanwhile, China has also been one of the largest recipients of foreign direct investment (FDI) in the world. Its experience with exports and FDI undoubtedly has important implications for other developing countries. Rapid growth in China’s exports appears to have been due to its increasing involvement in processing trade, which is facilitated by FDI. Trade intermediaries and indirect export through Hong Kong also seem to have played an important role in this process. Intermediary firms play an important role in international trade, especially in Asian developing countries, and recent research in international trade has begun to examine the role of intermediary firms in export expansion. The chapter provides an updated picture of China’s exports and FDI by surveying the most recent research on this topic. It also identifies the challenges China faces, and explores the policy implications.

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