## _wp12267 — Appendix B (Selected Findings)

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---

### I. A growth model dependent on investment
- Investment contributed around one-half of China’s GDP growth in the 2000s, with particularly large contributions toward the end of the decade (although, in 2011, the contribution of investment dipped below that of consumption for the first time since 2005).
- Investment as a share of GDP increased by close to 6 percentage points during the 2008–10 stimulus, reaching 48 percent of GDP in 2010.
- Shifts in investment composition and onshoring of manufacturing have led to:
  - A gradual decline in the share of machinery imports.
  - A steady increase in the share and volumes of mineral and metal imports.

### II. Assessing exposures to investment-led growth in China
- Three broad risk outcomes from China’s investment-driven capacity buildup:
  - New capacity exported to world markets, potentially depressing global prices and provoking retaliatory trade actions that slow Chinese investment.
  - New capacity remains underutilized, hurting bank balance sheets and credit conditions and constraining future investment.
  - A smooth hand-off from investment to consumption (analyzed in Section IV).
- Spillover measure (definition used):
  - China spillover_jt = exCHN_j * China Fixed Investment growth_t
  - where exCHN_j = (Exports to China / GDP)_j
  - China Fixed Investment growth_t is the annual percent change of real gross fixed capital formation.
- Empirical sample and estimation:
  - Broad sample of 64 economies, covering 2002–11 (China’s WTO period).
  - Main regression includes partner lagged growth, annual percent change in terms of trade, and macro volatility (standard deviation of GDP growth over moving five-year windows).
- Sectoral decomposition:
  - Fixed investment growth in China measured overall, manufacturing, and nontradables (nontradables include utilities, construction, transport and storage, IT, wholesale and retail trade, catering, banking and insurance, real estate, leasing and commercial services, education, health care, sport and entertainment, and public administration).
  - Manufacturing investment reflects global business cycle influence; nontradables investment has spillovers beyond global growth.

### III. Effects of an investment slowdown in China
- Aggregate and regional impacts:
  - Aggregating across all 64 economies (weighted by PPP shares), a one percentage point slowdown in investment in China reduces global growth by just under one-tenth of a percentage point. This impact is about five times larger than in 2002 (estimated to be 0.02 percentage points).
  - Regional supply chain economies are most exposed:
    - Taiwan Province of China: a 1 percentage point decline in China investment growth → GDP growth falls by slightly over nine-tenths of a percentage point.
    - Korea: large exposure; impact sizable but peaks and fades faster than for Japan/Germany.
    - Malaysia: highly exposed.
  - Advanced economy exporters of capital goods:
    - Japan: decline of just over one-tenth of a percentage point in response to a 1 percentage point China investment slowdown.
    - Germany: decline slightly smaller than Japan.
- Commodity exporters:
  - Chile: a 1 percentage point slowdown in China investment growth → reduction in growth close to two-fifths of a percentage point.
  - Larger, more diversified commodity exporters such as Australia and Brazil suffer relatively smaller declines.
- Sectoral slowdown comparisons:
  - Slowdown concentrated in manufacturing: spillover magnitude broadly similar to slowdown in overall fixed investment.
  - Slowdown concentrated in nontradables: considerably smaller impact (e.g., Taiwan Province of China: around three-fourths of a percentage point vs. slightly greater than nine-tenths for a generalized slowdown; Chile: around one-third of a percentage point vs. two-fifths).
- Additional finding:
  - Once controlling for global growth excluding China, the spillover effect via China’s manufacturing fixed investment is no longer significant; nontradables retain spillover significance beyond global growth effects.

### IV. Implications of a hand-off to consumption
- Rebalancing scenario:
  - A successful hand-off (absorption of capacity domestically via stronger consumption as in the 12th Five-Year Plan) could moderate China’s growth while keeping it above 8 percent in the medium term (as outlined in the rebalancing scenario in the Staff Report for the 2011 Article IV Consultation with China).
- Direct spillover from China consumption:
  - China accounts for only 2 percent of global consumer goods imports.
  - Panel regressions for the 64-economy sample show effects of China consumption growth on partner growth are insignificant.

### V. Effects of an investment slowdown on G20 macro indicators (FAVAR analysis)
- Model and shock specification:
  - Stable Factor-Augmented VAR (FAVAR) in growth (except for balances and interest rates) with five common factors for China and five for the rest of the G20, plus China’s fixed asset investment (FAI).
  - Balanced panel of 390 monthly series, 2000M1–2011M9 (68 China variables, 322 rest-of-G20).
  - Shock: an exogenous, temporary, one-standard-deviation growth shock to China’s FAI:
    - One-time 15-percentage-point (seasonally adjusted, annualized) drop in FAI growth that reverts to trend largely within 7-8 months.
    - One standard deviation shock ≡ 1.2 percentage points month-over-month (seasonally adjusted) growth.
    - The shock dampens within 3 quarters and dissipates fully after around 40 months.
    - The decline in FAI level is permanent; shock ≈ 2½ percent drop from baseline in real FAI level 12 months after.
- Aggregate and country-level impacts:
  - Global PPP-weighted G20 GDP growth implied peak impact: -0.2 percentage point; around 0.1 percent below baseline at 12 months after the shock.
  - Industrial production and GDP:
    - Capital goods manufacturers with sizable exports to China (Germany, Japan) and close integration with G20 suffer larger impacts.
    - Korea: impact peaks within first 2 quarters and fades faster.
    - Canada: sizable impact at one year.
    - Indonesia: impact on output not statistically significant over entire period (recent coal exports to China explain recent importance).
  - Trade:
    - Global total exports and imports decline; economies integrated through supply chains (Germany, Japan) face stronger second-round impacts.
  - Asset prices and financial variables:
    - Stock market peak impacts: up to 5–5½ percentage points in India and Brazil; between 4–4½ percentage points in the Euro Area, Germany, and Japan; effects last 4–5 quarters.
    - Sovereign bond spreads: cumulative 12-month decline in 10Y-2Y spreads for several economies (U.S. shows initial decline reversed around 3 quarters, reflecting safe-haven status).
  - Commodities and inflation:
    - Nonfuel primary commodity price growth falls for metals: iron ore, aluminum, copper, lead, nickel, zinc fall by as much as 3–9 percentage points (peak).
    - Price levels fall around 2–5½ below baseline levels one year out for these metals (Appendix B, Table 2).
    - Crude oil price response unclear / not statistically significant.
    - Appendix B, Table 4 indicates China’s investment drive materially boosted construction-related metal prices between 2008 and 2011 under a counterfactual where investment-to-GDP was held at end-2007 level.
  - Summary metric:
    - One year after the shock, commodity prices, especially metal prices, could fall by as much as 0.8–2.2 percent from baseline levels for every 1 percent drop in China’s FAI.

### VI. Summary — Key findings and implications
- Spillover magnitudes:
  - Each percentage point deceleration in China’s investment growth is estimated to subtract between one-half and nine-tenths of a percentage point from GDP growth in regional supply chain economies such as Taiwan Province of China, Korea, and Malaysia.
  - Major commodity producers with large exposures to China (Chile, Saudi Arabia) would also suffer substantial growth declines.
- Cross-domain spillovers:
  - China FAI declines most strongly affect capital goods manufacturing economies with sizable exports to China and high integration with the G20 (Germany, Japan).
  - Economies less reliant on China (U.K., India) face moderate spillovers on industrial production and output.
  - Commodity exporters (Canada, Brazil) would face non-negligible export and output losses.
  - Financial markets: notable stock price declines and shifts in sovereign bond spreads (U.S. exception as a safe haven).
  - Commodity prices, especially metals, could fall materially (e.g., 0.8–2.2 percent one year out per 1 percent drop in China’s FAI).

### Appendix A — Summary statistics and regression results (selected)
- China fixed investment (2002–11): 13.53 / 3.79 / 9.7 / 23.5
- China manufacturing fixed investment: 16.6 / 2.9 / 11.0 / 20.6
- China nontradables fixed investment: 11.4 / 6.2 / 5.6 / 26.8
- Country summary (Mean / Std Dev / Min / Max): Australia: 2.4 / 1.4 / 1.1 / 5.0; Brazil: 1.0 / 0.4 / 0.5 / 1.8; Chile: 4.7 / 2.2 / 1.8 / 8.0; Germany: 1.3 / 0.4 / 0.7 / 2.0; Japan: 2.1 / 0.6 / 1.0 / 2.8; Korea: 8.3 / 2.6 / 4.1 / 12.0; Malaysia: 8.6 / 3.2 / 5.2 / 16.6; Taiwan Province of China: 12.9 / 4.9 / 3.3 / 18.0; United States: 0.4 / 0.2 / 0.2 / 0.7
- Baseline regression (Fixed Effects, 2002–11; Table 1):
  - China spillover effect (Total Investment): 0.0128*** (0.00418)
  - China spillover effect (Manufacturing): 0.0381*** (0.0106)
  - China spillover effect (Nontradables): 0.0255*** (0.00561)
  - R-squared: 0.03 / 0.13 / 0.14 (Columns 1/2/3)
- Global Crisis and Stimulus Period (2008–11; Table 2):
  - China spillover effect (Total Investment): 0.0741*** (0.0105)
  - China spillover effect (Manufacturing): 0.0901*** (0.0201)
  - China spillover effect (Nontradables): 0.0561*** (0.00747)
  - R-squared: 0.20 / 0.14 / 0.21 (Columns 1/2/3)
- Results robust to Panel GMM, inclusion of lagged growth, and alternative specifications.
- Consumption spillovers (Table 6): China spillover effect (consumption) insignificant: -0.0110 (0.0145) for 2002-2011 and -0.0319 (0.0362) for 2008-2011.

### Appendix B — Impacts one year after a 1-percent exogenous decline in China's real total FAI (selected tables)
- Note: A one-standard-deviation decline in growth is equivalent to 2.5-percent decline in total FAI levels from baseline.
- FA I: Economic activity indicators (percent below baseline level), impacts one year after a 1-percent exogenous decline in China's real total FAI (selected):
  - Argentina: Industrial Production 0.54; Real GDP 0.11
  - Australia*: Industrial Production 0.02; Real GDP 0.00
  - Brazil: Industrial Production 0.25; Real GDP 0.05
  - Canada**: Industrial Production n.a.; Real GDP 0.06
  - Germany: Industrial Production 0.61; Real GDP 0.11
  - Japan: Industrial Production 0.55; Real GDP 0.12
  - Korea: Industrial Production 0.14; Real GDP 0.04
  - PPP-weighted average: 0.06
  - * Estimates for Australia and Indonesia are not statistically significant.
  - ** Canada's economic activity is represented by monthly real GDP index, all industries.
- Selected commodity price impacts one year after a 1-percent exogenous decline in China's real total FAI (percent below baseline level):
  - Metals: 1.3
  - Non-fuel primary commodities: 0.7
  - Zinc: 2.2
  - Nickel: 1.8
  - Lead: 1.8
  - Copper: 1.6
  - Iron ore: 0.8
  - Aluminum: 1.0
  - Rubber: 0.6
  - Silver: 0.6
  - Gold: 0.2
- Trade indicators (percent below baseline level), impacts one year after a 1-percent exogenous decline in China's real total FAI (selected):
  - Argentina: Total Imports 2.24 / Total Exports 0.35
  - Australia: 0.75 / 0.13
  - Brazil: 0.98 / 0.58
  - Canada: 0.91 / 0.87
  - China: 0.74 / 0.74
  - Germany: 0.74 / 0.85
  - Japan: 0.87 / 0.66
  - US: 0.92 / 0.58
  - EU: 0.83 / 0.90
  - Weighted average: 0.82* / 0.76**
  - *Import-weighted. ** Export-weighted.
- Table 4 — Impact on metal prices from China's investment drive during 2008–11 (model-implied difference from counterfactual, actual change, counterfactual change):
  - Zinc: 75.1; 16.5; -58.6
  - Nickel: 60.6; 8.4; -52.2
  - Lead: 59.3; 14.7; -44.7
  - Copper: 52.6; 26.7; -25.9
  - Aluminum: 33.4; -6.9; -40.3
  - Iron Ore: 24.3; 172.6; 148.3
  - Silver: 20.3; 135.1; 114.8
  - Rubber: 18.4; 84.3; 65.9
  - Gold: 4.0; 79.9; 75.9
  - Note: Counterfactual scenario assumes China's investment-to-GDP ratio is maintained at end-2007 level during 2008-11, which translates to 34.4 percent lower FAI than actual level.

*Source: _wp12267 - Appendix B and References (provided PDF content).*

### References................................................................................................12

### _wp12267 - References................................................................................................12

### References
- References................................................................................................12

### Appendix A
- Appendix A...............................................................................................13

*Source: _wp12267 - References................................................................................................12*

### Appendix B................................................................................................18

### _wp12267 - Appendix B................................................................................................18

### I. A GROWTH MODEL DEPENDENT ON INVESTMENT
- Investment contributed around one-half of China’s GDP growth in the 2000s, with particularly large contributions toward the end of the decade (although, in 2011, the contribution of investment dipped below that of consumption for the first time since 2005).
- Investment as a share of GDP increased by close to 6 percentage points during the 2008–10 stimulus, reaching 48 percent of GDP in 2010.
- Shifts in investment composition and onshoring of manufacturing have led to:
  - A gradual decline in the share of machinery imports.
  - A steady increase in the share and volumes of mineral and metal imports.

### II. ASSESSING EXPOSURES TO INVESTMENT-LED GROWTH IN CHINA
- Three broad risk outcomes from China’s investment-driven capacity buildup:
  - New capacity exported to world markets, potentially depressing global prices and provoking retaliatory trade actions that slow Chinese investment.
  - New capacity remains underutilized, hurting bank balance sheets and credit conditions and constraining future investment.
  - A smooth hand-off from investment to consumption (analyzed in Section IV).
- Spillover measure (definition used):
  - China spillover_jt = exCHN_j * China Fixed Investment growth_t
  - where exCHN_j = (Exports to China / GDP)_j
  - China Fixed Investment growth_t is the annual percent change of real gross fixed capital formation.
- Empirical sample and estimation:
  - Broad sample of 64 economies, covering 2002–11 (China’s WTO period).
  - Main regression includes partner lagged growth, annual percent change in terms of trade, and macro volatility (standard deviation of GDP growth over moving five-year windows).
- Sectoral decomposition:
  - Fixed investment growth in China is measured overall, manufacturing, and nontradables (nontradables include utilities, construction, transport and storage, IT, wholesale and retail trade, catering, banking and insurance, real estate, leasing and commercial services, education, health care, sport and entertainment, and public administration).
  - Manufacturing investment reflects global business cycle influence; nontradables investment has spillovers beyond global growth.

### III. EFFECTS OF AN INVESTMENT SLOWDOWN IN CHINA
- Aggregate and regional impacts:
  - Aggregating across all 64 economies (weighted by PPP shares), a one percentage point slowdown in investment in China reduces global growth by just under one-tenth of a percentage point. This impact is about five times larger than in 2002 (estimated to be 0.02 percentage points).
  - Regional supply chain economies are most exposed:
    - Taiwan Province of China: a 1 percentage point decline in China investment growth → GDP growth falls by slightly over nine-tenths of a percentage point.
    - Korea: large exposure; impact sizable but peaks and fades faster than for Japan/Germany.
    - Malaysia: highly exposed.
  - Advanced economy exporters of capital goods:
    - Japan: decline of just over one-tenth of a percentage point in response to a 1 percentage point China investment slowdown.
    - Germany: decline slightly smaller than Japan.
- Commodity exporters:
  - Chile: a 1 percentage point slowdown in China investment growth → reduction in growth close to two-fifths of a percentage point.
  - Larger, more diversified commodity exporters such as Australia and Brazil suffer relatively smaller declines.
- Sectoral slowdown comparisons:
  - Slowdown concentrated in manufacturing: spillover magnitude broadly similar to slowdown in overall fixed investment.
  - Slowdown concentrated in nontradables: considerably smaller impact (e.g., Taiwan Province of China: around three-fourths of a percentage point vs. slightly greater than nine-tenths for a generalized slowdown; Chile: around one-third of a percentage point vs. two-fifths).
- Additional finding:
  - Once controlling for global growth excluding China, the spillover effect via China’s manufacturing fixed investment is no longer significant; nontradables retain spillover significance beyond global growth effects.

### IV. IMPLICATIONS OF A HAND-OFF TO CONSUMPTION
- A successful hand-off (absorption of capacity domestically via stronger consumption as in the 12th Five-Year Plan) could moderate China’s growth while keeping it above 8 percent in the medium term (as outlined in the rebalancing scenario in the Staff Report for the 2011 Article IV Consultation with China).
- Direct spillover from China consumption growth on trading partner growth is negligible:
  - China accounts for only 2 percent of global consumer goods imports.
  - Panel regressions for the 64-economy sample show effects of China consumption growth on partner growth are insignificant.

### V. EFFECTS OF AN INVESTMENT SLOWDOWN ON G20 MACRO INDICATORS (FAVAR ANALYSIS)
- Model and shock specification:
  - Stable Factor-Augmented VAR (FAVAR) in growth (except for balances and interest rates) with five common factors for China and five for the rest of the G20, plus China’s fixed asset investment (FAI).
  - Balanced panel of 390 monthly series, 2000M1–2011M9 (68 China variables, 322 rest-of-G20).
  - Shock: an exogenous, temporary, one-standard-deviation growth shock to China’s FAI:
    - One-time 15-percentage-point (seasonally adjusted, annualized) drop in FAI growth that reverts to trend largely within 7-8 months.
    - One standard deviation shock ≡ 1.2 percentage points month-over-month (seasonally adjusted) growth.
    - The shock dampens within 3 quarters and dissipates fully after around 40 months.
    - The decline in FAI level is permanent; shock ≈ 2½ percent drop from baseline in real FAI level 12 months after.
- Aggregate and country-level impacts:
  - Global PPP-weighted G20 GDP growth implied peak impact: -0.2 percentage point; around 0.1 percent below baseline at 12 months after the shock.
  - Industrial production and GDP:
    - Capital goods manufacturers with sizable exports to China (Germany, Japan) and close integration with G20 suffer larger impacts.
    - Korea: impact peaks within first 2 quarters and fades faster.
    - Canada: sizable impact at one year.
    - Indonesia: impact on output not statistically significant over entire period (recent coal exports to China explain recent importance).
  - Trade:
    - Global total exports and imports decline; economies integrated through supply chains (Germany, Japan) face stronger second-round impacts.
  - Asset prices and financial variables:
    - Stock market peak impacts: up to 5–5½ percentage points in India and Brazil; between 4–4½ percentage points in the Euro Area, Germany, and Japan; effects last 4–5 quarters.
    - Sovereign bond spreads: cumulative 12-month decline in 10Y-2Y spreads for several economies (U.S. shows initial decline reversed around 3 quarters, reflecting safe-haven status).
  - Commodities and inflation:
    - Nonfuel primary commodity price growth falls for metals: iron ore, aluminum, copper, lead, nickel, zinc fall by as much as 3–9 percentage points (peak).
    - Price levels fall around 2–5½ below baseline levels one year out for these metals (Appendix B, Table 2).
    - Crude oil price response unclear / not statistically significant.
    - Appendix B, Table 4 indicates China’s investment drive materially boosted construction-related metal prices between 2008 and 2011 under a counterfactual where investment-to-GDP was held at end-2007 level.
  - A summary metric:
    - One year after the shock, commodity prices, especially metal prices, could fall by as much as 0.8–2.2 percent from baseline levels for every 1 percent drop in China’s FAI.

### VI. SUMMARY (Key findings and implications)
- A rapid investment slowdown in China is likely to have large spillover effects on many trading partners:
  - Each percentage point deceleration in China’s investment growth is estimated to subtract between one-half and nine-tenths of a percentage point from GDP growth in regional supply chain economies such as Taiwan Province of China, Korea, and Malaysia.
  - Major commodity producers with large exposures to China (Chile, Saudi Arabia) would also suffer substantial growth declines.
- Spillovers register across macroeconomic, trade, financial variables, and world commodity prices:
  - China FAI declines most strongly affect capital goods manufacturing economies with sizable exports to China and high integration with the G20 (Germany, Japan).
  - Economies less reliant on China (U.K., India) face moderate spillovers on industrial production and output.
  - Commodity exporters (Canada, Brazil) would face non-negligible export and output losses.
  - Financial markets: notable stock price declines and shifts in sovereign bond spreads (U.S. exception as a safe haven).
  - Commodity prices, especially metals, could fall materially (e.g., 0.8–2.2 percent one year out per 1 percent drop in China’s FAI).

*Source: _wp12267 - Appendix B (content provided from the specified PDF).*

### REFERENCES

### _wp12267 - REFERENCES

### References
- Bernanke, B., J. Boivin, and P. Eliasz, 2005, “Measuring the Effects of Monetary Policy: A Factor-Augmented Vector Autoregressive (FAVAR) Approach,” Quarterly Journal of Economics, Vol. 120, No.1, pp. 387–422.
- Boivin, J., and M. Giannoni, 2008. “Global Forces and Monetary Policy Effectiveness,” NBER Working Paper 13736.
- Guo, Kai, 2011, “Factor Pricing, Overcapacity, and Sustainability Risks,” People’s Republic of China Spillover Report—Selected Issues (unpublished; Washington: International Monetary Fund).
- International Monetary Fund, 2012, “Is China Rebalancing? Implications for Asia,” Asia and Pacific Regional Economic Outlook, (April).
- Stock, J., and M. Watson, 2002, “Macroeconomic Forecasting Using Diffusion Indexes,” Journal of Business Economics and Statistics, XX:II pp 147–62.

### Appendix A — Contributions to Growth from Exports to China, Select Economies
- Direct accounting approach indicates the contribution to growth from exports to China increased appreciably during the global financial crisis period.
- Decomposition by product type for large capital goods exporters and commodity producers:
  - Contribution to growth generated by exports to China increased sharply during the financial crisis and China’s stimulus response.
  - Calculation is bilateral accounting and not causal, but confirms the cross-country regression result of growing Chinese influence on trading partner growth.
- Commodity exporters: contribution to growth from mineral exports to China more than doubled during 2008-11 compared to 2001–07.
  - Australia: mineral exports to China accounted for just below one-half of growth in the later interval.
  - Brazil: exports to China account for a relatively small fraction of overall growth even during China’s infrastructure expansion.

- Summary statistics, 2002–11 (Mean / Std Dev / Min / Max):
  - China fixed investment: 13.53 / 3.79 / 9.7 / 23.5
  - China manufacturing fixed investment: 16.6 / 2.9 / 11.0 / 20.6
  - China nontradables fixed investment: 11.4 / 6.2 / 5.6 / 26.8
  - Australia: 2.4 / 1.4 / 1.1 / 5.0
  - Brazil: 1.0 / 0.4 / 0.5 / 1.8
  - Chile: 4.7 / 2.2 / 1.8 / 8.0
  - Germany: 1.3 / 0.4 / 0.7 / 2.0
  - Japan: 2.1 / 0.6 / 1.0 / 2.8
  - Korea: 8.3 / 2.6 / 4.1 / 12.0
  - Malaysia: 8.6 / 3.2 / 5.2 / 16.6
  - Taiwan Province of China: 12.9 / 4.9 / 3.3 / 18.0
  - United States: 0.4 / 0.2 / 0.2 / 0.7
- Note: Sources: DOTS; WEO.

### Appendix A — Sector Contributions (selected)
- Exports to China: Contribution to Growth (Period average, in percentage points by category)
  - Periods: 2001-2007 and 2008-2011
  - Notable observation: Despite rise of luxury goods exports (e.g., high-end passenger cars) to China from Japan and Germany, their contribution to source economies' growth remains relatively small.

### Regression Results — Baseline Estimates, Entire WTO Period (2002–11); Fixed Effects
- Dependent variable: Real GDP Growth, y/y percent change. Fixed Effects Estimation. Robust Standard Errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1
- Table 1 (Columns: Total Investment (1), Manufacturing (2), Nontradables (3)):
  - China spillover effect: 0.0128*** (0.00418); 0.0381*** (0.0106); 0.0255*** (0.00561)
  - Terms of trade: 9.69e-06*** (1.85e-06); 0.000589 (0.00303); 0.000260 (0.00306)
  - Volatility of growth: -0.424 (0.271); -0.771*** (0.231); -0.854*** (0.247)
  - SAMPLE YEARS: 2002-2011
  - Number of countries: 64 64 64
  - Observations: 640 448 448
  - R-squared: 0.03 0.13 0.14

- Table 2 (Global Crisis and Stimulus Period, 2008–11; Fixed Effects):
  - China spillover effect: 0.0741*** (0.0105); 0.0901*** (0.0201); 0.0561*** (0.00747)
  - Terms of trade: -0.00414 (0.00433); -0.00159 (0.00428); -0.00393 (0.00433)
  - Volatility of growth: -0.828*** (0.146); -0.566*** (0.184); -0.897*** (0.141)
  - SAMPLE YEARS: 2008-2011
  - Number of countries: 64 64 64
  - Observations: 256 256 256
  - R-squared: 0.20 0.14 0.21
- Results robust to changes in estimation technique (Panel GMM) and inclusion of lagged growth.

- Table 3 (Entire WTO period, 2002–11; GMM):
  - Lagged GDP growth: 0.230*** (0.0527); -0.127 (0.0886); -0.0751 (0.0950)
  - China spillover effect: 0.0332*** (0.00840); 0.0457*** (0.0132); 0.0367*** (0.00718)
  - Terms of trade: -2.50e-06 (1.27e-05); -1.91e-06 (0.00321); -0.000655 (0.00332)
  - Volatility of growth: -0.299 (0.278); -1.312*** (0.289); -1.407*** (0.263)
  - SAMPLE YEARS: 2002-2011
  - Number of countries: 64 64 64
  - Observations: 640 384 384
  - Arellano Bond test of no second order autocorrelation in first-differenced errors (p-value): 0.22 0.08 0.15

- Table 4 (Global Crisis and Stimulus Period, 2008–11; GMM):
  - Lagged GDP growth: -0.130 (0.139); -0.241** (0.113); -0.122 (0.139)
  - China spillover effect: 0.0543*** (0.0103); 0.0511*** (0.0116); 0.0434*** (0.00797)
  - Terms of trade: -0.00685 (0.00430); -0.00632 (0.00394); -0.00684 (0.00424)
  - Volatility of growth: -1.973*** (0.423); -2.006*** (0.378); -2.001*** (0.416)
  - SAMPLE YEARS: 2008-2011
  - Number of countries: 64 64 64
  - Observations: 256 256 256
  - Arellano Bond test p-values: 0.11 0.28 0.12

- Table 5 (Robustness Check for Global Crisis and Stimulus Period, 2008–11; GMM):
  - Lagged GDP growth: -0.0805 (0.0803); -0.0412 (0.0949); -0.0772 (0.0809)
  - China spillover effect: 0.0250*** (0.00815); 0.00889 (0.00973); 0.0211*** (0.00608)
  - Terms of trade: -0.000646 (0.00297); -0.00199 (0.00280); -0.000725 (0.00297)
  - Volatility of growth: -1.363*** (0.276); -1.119*** (0.332); -1.388*** (0.274)
  - World growth ex China: 0.696*** (0.0920); 0.875*** (0.109); 0.684*** (0.0916)
  - SAMPLE YEARS: 2008-2011
  - Number of countries: 64 64 64
  - Observations: 256 256 256
  - Arellano Bond test p-values: 0.43 0.05 0.49

- Key regression conclusion bullets:
  - Effect is stronger in recent years (2008-11).
  - China’s nontradables investment has a spillover impact beyond the effect of global growth.
  - China’s consumption growth has an insignificant spillover impact on trading partner growth (Table 6).

- Table 6 (Spillover Effects From China Consumption Growth; Panel GMM):
  - Columns: SAMPLE YEARS 2002-2011 and 2008-2011
  - Lagged GDP growth: 0.198*** (0.0541); -0.240* (0.131)
  - China spillover effect (consumption): -0.0110 (0.0145); -0.0319 (0.0362)
  - Terms of trade: 5.13e-06 (1.49e-05); -0.00472 (0.00427)
  - Volatility of growth: -0.345 (0.285); -2.059*** (0.430)
  - Number of countries: 64 64
  - Observations: 640 256
  - Arellano Bond test p-values: 0.77 0.45

### Appendix B — Impacts One Year After a 1-percent Exogenous Decline in China's Real Total FAI
- Note: A one-standard-deviation decline in growth is equivalent to 2.5-percent decline in total FAI levels from baseline.

- FA I: Economic Activity Indicators (in percent below baseline level), impacts one year after a 1-percent exogenous decline in China's real total FAI:
  - Argentina: Industrial Production 0.54; Real GDP 0.11
  - Australia*: Industrial Production 0.02; Real GDP 0.00
  - Brazil: Industrial Production 0.25; Real GDP 0.05
  - Canada**: Industrial Production n.a.; Real GDP 0.06
  - China: Industrial Production 0.12; Real GDP 0.10
  - France: Industrial Production 0.17; Real GDP 0.02
  - Germany: Industrial Production 0.61; Real GDP 0.11
  - India: Industrial Production 0.28; Real GDP 0.05
  - Indonesia*: Industrial Production 0.15; Real GDP 0.05
  - Italy: Industrial Production 0.46; Real GDP 0.08
  - Japan: Industrial Production 0.55; Real GDP 0.12
  - Mexico: Industrial Production 0.34; Real GDP 0.09
  - Russian Federation: Industrial Production 0.25; Real GDP 0.05
  - Saudi Arabia: Industrial Production 0.09; Real GDP 0.02
  - South Africa: Industrial Production 0.30; Real GDP 0.05
  - Korea: Industrial Production 0.14; Real GDP 0.04
  - Turkey: Industrial Production 0.45; Real GDP 0.09
  - UK: Industrial Production 0.13; Real GDP 0.02
  - US: Industrial Production 0.21; Real GDP 0.03
  - EU: Industrial Production 0.19; Real GDP 0.03
  - PPP-weighted average: 0.06
  - * Estimates for Australia and Indonesia are not statistically significant.
  - ** Canada's economic activity is represented by monthly real GDP index, all industries.

- Selected commodity price impacts one year after a 1-percent exogenous decline in China's real total FAI (in percent below baseline level):
  - Metals: 1.3
  - Non-fuel primary commodities: 0.7
  - Zinc: 2.2
  - Nickel: 1.8
  - Lead: 1.8
  - Copper: 1.6
  - Iron ore: 0.8
  - Aluminum: 1.0
  - Rubber: 0.6
  - Silver: 0.6
  - Gold: 0.2

- Trade indicators, impacts one year after a 1-percent exogenous decline in China's real total FAI (in percent below baseline level):
  - Total Imports / Total Exports:
    - Argentina: 2.24 / 0.35
    - Australia: 0.75 / 0.13
    - Brazil: 0.98 / 0.58
    - Canada: 0.91 / 0.87
    - China: 0.74 / 0.74
    - France: 0.69 / 0.85
    - Germany: 0.74 / 0.85
    - India: 0.42 / 0.79
    - Indonesia: 0.48 / 0.77
    - Italy: 1.01 / 1.15
    - Japan: 0.87 / 0.66
    - Mexico: 0.90 / 0.94
    - Russian Federation: 0.85 / 0.56
    - Saudi Arabia: 0.44 / 0.95
    - South Africa: 0.68 / 0.14
    - Korea: 0.65 / 0.74
    - Turkey: 0.93 / 0.52
    - UK: 0.93 / 0.90
    - US: 0.92 / 0.58
    - EU: 0.83 / 0.90
    - Weighted average: 0.82* / 0.76**
    - *Import-weighted. ** Export-weighted.

- Table 4 — Impact on metal prices from China's investment drive during 2008–11 (model-implied difference from counterfactual, actual change, counterfactual change):
  - Zinc: Model's implied difference from counterfactual, in percent: 75.1; Actual change, in percent: 16.5; Counterfactual change (without China's investment drive), in percent: -58.6
  - Nickel: 60.6; 8.4; -52.2
  - Lead: 59.3; 14.7; -44.7
  - Copper: 52.6; 26.7; -25.9
  - Aluminum: 33.4; -6.9; -40.3
  - Iron Ore: 24.3; 172.6; 148.3
  - Silver: 20.3; 135.1; 114.8
  - Rubber: 18.4; 84.3; 65.9
  - Gold: 4.0; 79.9; 75.9
  - Note: Counterfactual scenario assumes China's investment-to-GDP ratio is maintained at end-2007 level during 2008-11, which translates to 34.4 percent lower FAI than actual level.

*Source: _wp12267 - REFERENCES (IMF PDF content provided).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2012/_wp12267.pdf_