Measuring distortions of trade patterns: An application to China

This study develops a new analytical framework for comparative advantages and net export capabilities. We devise the weighted H-index to capture the distortions of trade patterns under a technology based classification scheme. Using annual data from 1992 to 2008, we find that most categories have shown propensities for “positive distortions” which are featured with excessive net exports in relation to comparative advantages. Most H-indexes have been significantly positive and have tended to increase until the 2007 financial crisis, reflecting a strong mercantilist tendency in Chinese trade policies.