Contagion Effect, Asian Trade Integration and the Decoupling Debate

China's economic interaction with the world economy has been significantly strengthened through a system of two-way feedback. In the context of economic globalization and economic interdependence, how can Chinese policies be better coordinated with those of other countries, and how can China fully embrace the role of bilateral and multilateral power? What is the interaction mechanism and transmission of the Chinese business cycle in relation to the global business cycle, and what are the resulting policy implications? This book investigates the evolution and nature of macroeconomic interdependence between China and other major players in the world economy in order to analyze China's global economic role and aims to answer these questions theoretically and empirically. Its aim is to also discover whether there has been decoupling or convergence of business cycles, through various trade channels. Both correlation analyses and dynamic factor models are utilized to study the evolution of global business cycle linkages.