Does political conflict reduce exports to China? Evidence from the ’Quad’ with a focus on the China-Australia relationship

Crawford School of Public Policy
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Event details

PhD Seminar (Econ)

Date & time

Friday 21 May 2021


Weston Lecture Theatre, Crawford School of Public Policy, #132 Lennox Crossing, ANU


Vishesh Agarwal

This paper quantifies the effects of moderate shocks in political relations on merchandise goods exports to China for the ’Quad’ countries, namely Australia, India, Japan, and the US between 1998 and 2018. Using a vector autoregression approach, our estimates suggest that although deteriorating political relations can have significant negative effects on export growth to China, these effects are small for all countries considered and largely short-lived for the case of India and the US, lasting between one to six months. A disaggregated analysis of five-year sub-periods shows that long-term effects that last for up to two years are significant for Australia for the sub-periods 2012-13, and for Japan between 1998-2002. Using product-level disaggregated trade data for Australia between 2001 and 2018, we find that effects of political relations on trade tend to vary by product-type, with a statistically significant long-term negative impact on export growth in mineral products and fuels which include Australia’s three top exports to China: iron ore, coal, and natural gas.

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