Globalisation and China's iron and steel industry: Modelling China's demand for steel importation

Abstract

Purpose

The purpose of this paper is to estimate China's import‐demand function for steel products within the context of globalisation.

Design/methodology/approach

The research used the monthly data for the period 1996‐2004 and a cointegration procedure is applied in the estimation.

Findings

The results show that the price and income elasticities of China's import demand for steel are no different from those of other countries investigated by other researches. Specifically, the results of this study are consistent with the hypothesis that China's import of steel products is strongly correlated with its economic activities and the fluctuation of its real exchange rate.

Practical implications

The empirical results obtained are important both for government policy and for employment. On the one hand, the magnitude of imports may adversely affect employment in China's steel industry. On the other hand, any changes in China's domestic macroeconomic activity and its exchange rate will generate great uncertainty in the world steel market.

Originality/value

This paper may be the first of its kind to apply the cointegration technique in estimating China's import‐demand function for steel products. It is important, given China's dominant position as both the biggest producer and the biggest consumer of steel products.

Citation

Hu, X., Ping, H., Xie, C. and Hu, X. (2008), "Globalisation and China's iron and steel industry: Modelling China's demand for steel importation", Journal of Chinese Economic and Foreign Trade Studies, Vol. 1 No. 1, pp. 62-74. https://doi.org/10.1108/17544400810854504