Three Taiwan-based economists examine the effects of GDP, per capita GDP, geographic distance, FDI outflows and inflows, openness to trade, bilateral investment treaties, and other factors on the volume of bilateral trade between China and 40 of its trading partners in the up-, mid- and downstream segments of the country's electronics industry. Pooled cross-section and time-series data are employed in an empirical estimation for the period 1995-2005, which indicate that the Chinese electronics sector's import/export volumes have grown substantially alongside China's economy. The authors address a specific set of issues questioning whether FDI inflows have created a trade effect in the electronics industry, whether they have lead to a measure of import substitution in China's electronics industry, and whether the net impact of opening the market has been positive or negative on the sector's foreign trade.
