Recently, Dr. DING Guanzu, a faculty member of the Department of Economics in the School of Business, in collaboration with scholars from Fudan University and Shanghai University of Finance and Economics, had his research paper named“External Economic and Trade Shocks, Domestic Factor Mobility, and China's Economic Growth” published in the top journal of economics in China, Economic Research, Issue No. 7, 2024.

This article points out that the impact of external economic and trade shocks on China's economic growth to a certain extent depends on domestic factor flows at the industrial and spatial levels. Accordingly, the article constructs a multinational and multi-sectoral general equilibrium analytical framework that includes external economic and trade shocks and domestic product and factor flows, and quantitatively evaluates the impact of external economic and trade shocks on China's real gross domestic product (GDP) by taking U.S.-China tariff fluctuations as an example. The study finds that: (1) although China's real GDP has been negatively impacted, the overall impact is basically within the controllable range; (2) if the inter-industry input-output linkages and cross-regional mobility of labor factors are not taken into account, the negative impact on China's economic growth will be significantly underestimated; (3) there is an obvious industry and regional transmission effect of the impact of the external trade and economic shocks on China's real GDP, i.e., the larger the net outflow of labor in the area as well as the larger the trade dependence on the United States, the greater the trade dependence on the United States. That is, in areas with a larger net outflow of labor and in industries and regions with a larger trade dependence on the U.S. and located downstream of the industrial chain, the negative impact is relatively larger. The article also simulates the policy effects of various countermeasures available to China, and finds that reducing domestic trade costs, facilitating the flow of product factors and encouraging innovation to upgrade domestic technology levels are important ways to resist negative external economic and trade shocks.

The study contributes to a better understanding of the new development pattern and provides a reference for policymaking to address the negative impact of external economic and trade shocks on economic growth.

Founded in 1955, Economic Research is a comprehensive economic theory journal organized by the Institute of Economics of the Chinese Academy of Social Sciences and under the supervision of the Chinese Academy of Social Sciences. The journal is dedicated to publishing high-level theoretical research articles on major practical issues in the cause of socialist economic construction with Chinese characteristics, and is highly recognized by the academic community at home and abroad.

Dr. DING Guanzu, young faculty member of School of Business, East China University of Science and Technology. His research domains include International Trade, Economic Structural Transformations.