China Spillovers: New Evidence from Time-Varying Estimates

The recent “rebalancing” of China’s economy has raised concerns that the country’s growth slowdown may have large global implications. This note looks at this issue by analyzing the effects of China’s growth shocks on the output of other countries and how these effects have changed over time. Estimates indicate that the magnitude of China’s spillovers has steadily increased during the last two decades, but remains yet limited. Spillovers are larger in neighboring (Asian) countries and in emerging markets and developing economies. Trade linkages remain main transmission channels. In addition, a negative shock in China has (marginal) positive effects for net commodity importers while negative for net commodity exporters.