TY  - JOUR
AU  - Cheung,Yin-Wong
AU  - Chinn,Menzie D.
AU  - Fujii,Eiji
TI  - The Chinese Economies in Global Context: The Integration Process and Its Determinants
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10047
PY  - 2003
Y2  - October 2003
UR  - http://www.nber.org/papers/w10047
L1  - http://www.nber.org/papers/w10047.pdf
N1  - Author contact info:
Yin-Wong Cheung
Department of Economics
University of California
Santa Cruz, CA  95064
E-Mail: cheung@ucsc.edu

Menzie D. Chinn
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI 53706
Tel: 608/262-7397
Fax: 608/262-2033
E-Mail: mchinn@lafollette.wisc.edu

Eiji Fujii
School of Economics
Kwansei Gakuin University
JAPAN
Tel: 81-798-547257
E-Mail: efujii@kwansei.ac.jp
AB  - The linkages between the People's Republic of China (PRC) and the other Chinese economies of Hong Kong and Taiwan are assessed, and compared against those with Japan and the US. We first characterize the time series behavior of variables corresponding to three criteria of integration, namely real interest parity, uncovered interest parity, and relative purchasing power parity. There is evidence that these parity conditions tend to hold over longer periods between the PRC and all other economies, although they do not hold instantaneously. In general, the magnitude of the deviations from the parity conditions is shrinking over time. Overall, however, Hong Kong exhibits indications of a more advanced level of integration with the PRC. We also find that evidence is surprisingly positive for integration with the US. We then turn to examining the determinants of the degree of integration. Regression results suggest that the degrees of financial and real integration depend upon the extent of capital controls, foreign direct investment linkages, as well as the magnitude of exchange rate volatility.
ER  -