Characteristics and determinants of asymmetric phase shifts in China’s manufacturing industrial production cycles

ABSTRACT

Employing a panel of 30 Chinese manufacturing industries from January 2003 through May 2017 (2003M01-2017M05), this study is the first attempt to investigate the characteristics and determinants of asymmetric phase shifts in China’s manufacturing industrial production cycles. The empirical results suggest that China’s manufacturing industries and aggregate industry have experienced similar frequent phase shifts, but remarkable differences exist in the phase shifts across manufacturing industries. Furthermore, China’s manufacturing industries tend to comove between cyclical phases in sync with the aggregate industrial cycle, but the comovement is asymmetric. In addition, the estimation results of the panel logit model indicate that both the spillovers through input-output linkages and some macroeconomic shocks (i.e. monetary policy and financial policy shocks) are significant determinants of China’s manufacturing industrial phase shifts; however, their effects are asymmetric. Finally, suggestions are offered to Chinese policymakers not only to weaken the economic effect of cyclical fluctuations, but also to promote growth in the manufacturing industries.

KEYWORDS:

• Manufacturing industrial production cycles
• aggregate industrial cycles
• comovement
• asymmetries
• China

JEL CLASSIFICATION:

• C13
• C33
• E23
• E32

Supplemental data

Supplemental data for this article can be accessed here.

Acknowledgments

The authors also thank the Editor and anonymous reviewer for helpful comments. The views expressed in this article are those of the authors and all remaining errors are our own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71303035]; Humanities and Social Sciences Project of the Ministry of Education [14YJC790055]; National Social Science Foundation of China [15ZDA011,16BJY075].