Does Foreign Political Instability Hinder China’s Export?

Abstract

China is able to export substantially despite of adverse political milieu in host nations. Such phenomenon is quite novel in existing literature, therefore current study explores the impact of foreign political instability on Chinese exports by using Panel Data of 134 countries & territories from 1992 to 2011. The results revealed that foreign political instability have positive and statistically robust impact on Chinese exports. The political instability in major and minor trading partners of China affects its trade positively but impact is higher with major trading partners. Elasticity of political instability in middle and upper middle income groups is positive and statistically significant, similar situation prevails in Middle East and North African region while it is positive and insignificant in all other regions.

Keywords: Political Instability, Exports, Generalized Method of Moments, China