Investigating the Asymmetry in Trade Balance Response to Oil Price Changes: Evidence from China

Examining the relation between oil price changes and trade balance is important for oil-importing countries to formulate policy solutions. This study contributes literature by examining asymmetric effects of in prices on China, world’s largest crude importer. To this end, Nonlinear Autoregressive Distributed Lag (NARDL) cointegration approach Pesaran’s Generalized Variance Decompositions technique are adopted. The results reveal that responds asymmetrically long run, while responses symmetric short run. indicate more sensitive increases than decreases. These China should support energy-efficient systems reduce its dependency imported oil.