Introduction

Published date03 October 2016
DOIhttps://doi.org/10.1108/JCEFTS-10-2016-036
Date03 October 2016
Pages174-176
AuthorK.C. Fung,Carlos M. Urzúa
Subject MatterEconomics,International economics
Introduction
Introduction to Special Issue of Journal of Chinese Economic and Foreign
Trade Studies
This Special Issue focuses on the important topic of “Two-Way Trade Flows: China
and Latin America”. Five peer-reviewed papers are included. Each paper
contributes to different interesting and relevant facets of the chosen theme.
The rst paper is on “Mirror Trade Statistics between China and Latin America”,
by Francisco Benita and Carlos M. Urzúa. It examines the important question of the
discrepancies of ofcial export and import data between China and its trading
partners in Latin America. The Latin American (LA) economies considered include
Argentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Cuba, Dominican Republic,
Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Uruguay and Venezuela. This is the rst paper in the literature to
examine in detail the potential sources of inaccuracies in these important trade data.
The paper rst explores some conventional factors that may explain why the
mirror trade statistics between China and Latin America can be so large. For
example, according to China statistics, in 2014 exports to Panama were 9.3bn
dollars. But according to the gures from Panama, imports from China were only
1.1bn dollars. The usual suspects that may explain the disparities include
“f.o.b.-c.i.f.” adjustments and potential input errors, product misclassication, time
lags and exchange rate changes. For the case of China, we also have the issue of
re-exports via Hong Kong. However, the paper nds that none of these can
satisfactorily explain the disparity. The paper then turns to trade invoicing between
China and LA countries. For the period considered (2009-2014), there was export
under-invoicing from the part of China for 11 partner countries in Latin America.
The export under-invoicing was extremely large for Bolivia, Mexico and Paraguay.
Such mis-invoicing is likely partly due to illegal capital ight. Finally, the paper
runs panel regressions and considers variables such as corruption perception index,
statistical capacity index and nancial openness index in explaining China–Latin
America trade data disparities. The main results seem to be that in some cases the
statistical capacity index is signicant. In other cases, nancial openness is
signicant. Generally, the corruption perception index is not signicant.
The second paper on “Mexico, Brazil and Chile: Potential Links with China and
South Korea” is by K.C. Fung,Hsiang-Chih Hwang,Jesús Seade and Rocky Y.Tung.
The paper examines the trade relationships between Mexico, Brazil and Chile on one
hand and China and South Korea on the other. The focus is on exchanges of parts
and components, especially telecom parts and electronic parts such as
semiconductor. While it is still early to conclude, the paper nds some preliminary
evidence that Mexico may be in the process of forming a trans-Pacic production
network with China and South Korea. Using panel regressions, the paper then
provides an empirical study showing that South Korean foreign direct investment
(FDI) as well as total FDI can facilitate trade in parts and components. The paper
also argues that joining free trade agreements like the Trans-Pacic Partnership by
various countries can enhance and intensify the East Asian and Trans-Pacic
production networks.
JCEFTS
9,3
174
Journalof Chinese Economic and
ForeignTrade Studies
Vol.9 No. 3, 2016
pp.174-176
©Emerald Group Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-10-2016-036

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