Trade Linkages, FDI and Business Cycle Synchronization

As trade integration increased among Asian countries, business cycle synchronization among these countries was expected to increase through trade transmission. Theoretically, however, increased trade can lead to business cycle synchronization either rising or falling. Inter-industry trade resulting in higher specialization will induce less synchronized business cycles, while intra-industry trade could lead to increased business cycle synchronization. Thus, it is important to distinguish between intra- and inter-industry trade flows. On the background of sustainable growth in China and world economy, the study of international trade and international financial interdependence will be timely and promising. Accordingly, the research analysis will put forward policy recommendations for China's response to the new characteristics of world economic cycle fluctuations, which has important theoretical significance and practical application value.