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The Domestic Segment of Global Supply Chains in China under State Capitalism

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  • Heiwai Tang
  • Fei Wang
  • Zhi Wang

Abstract

This paper proposes methods to incorporate firm heterogeneity in the standard IO-table based approach to portray the domestic segment of global value chains in a country. Using Chinese firm census data for both manufacturing and service sectors, along with constrained optimization techniques, we split the conventional IO table into sub-accounts, which are used to estimate direct and indirect domestic value added in exports of different types of firm. We find that in China, both state-owned enterprises (SOEs) and small and medium domestic private enterprises (SMEs) have much higher shares of indirect exports and ratios of value-added exports to gross exports (VAX), compared to foreign-invested and large domestic private firms. Based on IO tables for both 2007 and 2010, we find increasing VAX ratios for all firm types, particularly for SOEs. By extending the method proposed by Antràs et al. (2012), we find that SOEs are consistently more upstream while SMEs are consistently more downstream within industries. These findings suggest that SOEs still play an important role in shaping China’s exports.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4797.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4797

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Keywords: value-added trade; global supply chain; intra-national trade; state capitalism;

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References

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  1. Pol Antràs & Davin Chor & Thibault Fally & Russell Hillberry, 2012. "Measuring the Upstreamness of Production and Trade Flows," NBER Working Papers 17819, National Bureau of Economic Research, Inc.
  2. Chen, Xikang & Cheng, Leonard & Fung, K.C. & Lau, Lawrence J. & Sung, YunWing & Yang, C. & Zhu, K. & Pei, J. & Tang, Z., 2008. "Domestic Value Added and Employment Generated by Chinese Exports: A Quantitative Estimation," MPRA Paper 15663, University Library of Munich, Germany.
  3. Bernard, Andrew B. & Jensen, J. Bradford & Redding, Stephen J. & Schott, Peter K., 2010. "Wholesalers and Retailers in US Trade (Long Version)," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7642, C.E.P.R. Discussion Papers.
  4. Lee Branstetter & Nicholas Lardy, 2006. "China's Embrace of Globalisation," Working Papers id:640, eSocialSciences.
  5. Antràs, Pol & Chor, Davin, 2012. "Organizing the Global Value Chain," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9018, C.E.P.R. Discussion Papers.
  6. Zheng Song & Kjetil Storesletten & Fabrizio Zilibotti, 2011. "Growing Like China," American Economic Review, American Economic Association, American Economic Association, vol. 101(1), pages 196-233, February.
  7. Antras, Pol & Costinot, Arnaud, 2011. "Intermediated Trade," Scholarly Articles 4784024, Harvard University Department of Economics.
  8. Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, Elsevier, vol. 84(1), pages 73-85, May.
  9. Zhi Wang & Shang-Jin Wei & Kunfu Zhu, 2013. "Quantifying International Production Sharing at the Bilateral and Sector Levels," NBER Working Papers 19677, National Bureau of Economic Research, Inc.
  10. Elizabeth Asiedu & James A. Freeman, 2007. "The Effect of Globalization on the Performance of Small- and Medium-Sized Enterprises in the United States: Does Owners' Race/Ethnicity Matter?," American Economic Review, American Economic Association, American Economic Association, vol. 97(2), pages 368-372, May.
  11. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, Elsevier, vol. 54(1), pages 75-96, June.
  12. Koopman, Robert & Wang, Zhi & Wei, Shang-Jin, 2012. "Estimating domestic content in exports when processing trade is pervasive," Journal of Development Economics, Elsevier, Elsevier, vol. 99(1), pages 178-189.
  13. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, Elsevier, vol. 97(2), pages 339-351.
  14. Andrew B. Bernard & J. Bradford Jensen & Stephen Redding & Peter K. Schott, 2010. "Wholesalers and retailers in US Trade," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 28614, London School of Economics and Political Science, LSE Library.
  15. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, American Economic Association, vol. 104(2), pages 459-94, February.
  16. Puzzello, Laura, 2012. "A proportionality assumption and measurement biases in the factor content of trade," Journal of International Economics, Elsevier, Elsevier, vol. 87(1), pages 105-111.
  17. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2008. "How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive," NBER Working Papers 14109, National Bureau of Economic Research, Inc.
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