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Transmission and Diffusion Effect of Sino-US Trade Friction along Global Value Chains

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  • Wang, Xiaojuan
  • Shi, Benye

Abstract

This paper explores the transmission of Sino-US trade friction under the GVC division of labor and its diffusion effect from the perspective of third-country's value-added embedded in China's export to the US. It turns out that Sino-US bilateral trade shock may have a multilateral effect in the age of GVCs. The increase of US tariff on China will significantly reduce the value-added rate of trade partner and the third-countries embedded in China's exports to the US, thus making the impact of Sino-US trade shock pass on the countries along the GVCs. Besides, this “ripple effect” is especially notable through processing trade in Asian regional value chains and non-OECD countries. The conclusions of this paper have certain enlightenment significance to the current Sino-U.S. trade friction.

Suggested Citation

  • Wang, Xiaojuan & Shi, Benye, 2022. "Transmission and Diffusion Effect of Sino-US Trade Friction along Global Value Chains," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321001380
    DOI: 10.1016/j.frl.2021.102057
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    References listed on IDEAS

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