PUBLICATIONS & REPORTS
PUBLICATIONS & REPORTS
From Kitakyushu to the world: AGI, a research institute that studies Asia's economy and society
Exchange rate pass-through and firms in processing trade
| Author | Zhe Chen, Xiaonan SUN |
|---|---|
| Affiliation | Asian Growth Research Institute |
| Date of Publication | 2021.3 |
| No. | 2020-02 |
| Download | 546KB |
Contents Introduction
This study investigates the exchange rate pass-through in import prices and its relationship with trade mode choices of assembly firms in China. We first explore factors that may affect the exchange rate pass-through. We find that the ownership of assembly firms matters. Chinese-owned assembly firms bear higher exchange rate pass-through than joint-owned and foreign-owned assembly firms. This pattern persists even if we exclude trade intermediaries and control the quality of imported materials. Moreover, assembly firms that import materials from developed countries bear higher exchange rate passthrough, as do assembly firms with higher market shares, higher value-added, and those located in financially developed prefectures.