Machinery and China's nexus of foreign trade and economic growth

This paper offers an interpretation of China's nexus of foreign trade and economic growth that centres around technological development. Evidence, mainly related to the performance of the machinery sector, is presented indicating that the phenomenal export expansion is not reducible to a market-centred trade regime, and that the standard thesis of export-led growth would not apply—the contribution of trade to growth realises rather through imports. With an emphasis on the central importance of the production side, we present further evidence to substantiate the argument that the relatively successful aspects of the trade–growth nexus have been largely underpinned by a mix of the market mechanism and various non-market institutions. © 1998 John Wiley & Sons, Ltd.