South‐South cooperation: is there a foundation in trade?

Abstract

Purpose

The purpose of this paper is to examine the trade relationship between China and other developing countries, analyze the regional structure and the commodity composition, and give policy advice to promote economic and trade ties between them and then investigate the trade foundation of South‐South cooperation.

Design/methodology/approach

The approach takes the form of a statistical and quantitative analysis of trade flows. Some creative indicators are designed to measure the competitiveness and complementarities existing between China and developing countries. The sample of the study comprises 165 developing countries excluding those newly industrialized economies such as Singapore, and South Korea.

Findings

Developing countries are very important trade partners of China as a whole and trade with them has increased relatively fast in the last ten years. The pattern of trade shows that China has a complement in trade with most of developing countries although competitiveness exists in certain countries and some products. This close trade relationship laid a solid foundation for broader practice in South‐South cooperation including foreign direct investment.

Practical implications

China urgently needs to build a closed connection with other developing countries. The Going Out strategy provides an opportunity for Chinese firms to capture the international market and resources, and also for other developing countries to increase their domestic capital and production capability.

Originality/value

The paper assesses the trade relationship between China and other developing countries from a distinct perspective: South‐South cooperation. The findings are useful for policymakers to enhance South‐South cooperation and jointly face up to the challenges brought about by globalization.

Citation

Lu, X. and Li, R. (2010), "South‐South cooperation: is there a foundation in trade?", Journal of Chinese Economic and Foreign Trade Studies, Vol. 3 No. 3, pp. 221-234. https://doi.org/10.1108/17544401011084307