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Domestic value added and employment generated by Chinese exports: A quantitative estimation

  • Chen, Xikang
  • Cheng, Leonard K.
  • Fung, K.C.
  • Lau, Lawrence J.
  • Sung, Yun-Wing
  • Zhu, K.
  • Yang, C.
  • Pei, J.
  • Duan, Y.

We develop an input–output methodology to estimate how Chinese exports affected the country's total domestic value added (DVA) and employment in the years 2002 and 2007. For every US$1000 dollar of Chinese exports in 2007 (2002), DVA and employment are estimated to be US$591 (US$466) and 0.096 (0.242) person-year, respectively. To implement these estimations, we use hitherto unpublished Chinese government data to construct several completely new datasets, including an input–output table with separate input–output and employment-output coefficients for processing exports, non-processing exports, and output for domestic use. We hypothesize that, in comparison with the export sector, China's domestic sector would be relatively autarkic due to China's history of central planning. We expect that exports would generate less DVA and employment than output for domestic use. Processing exports, which are highly dependent on imported inputs, would similarly generate less DVA and employment than non-processing exports. Our findings support these expectations. For both 2002 and 2007, the DVA and employment effects of domestic final demand were higher than those of non-processing exports, which were in turn higher than those of processing exports. However, with the progress of economic reforms, we found that the total DVAs of exports and domestic final demand have converged from 2002 to 2007.

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Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 23 (2012)
Issue (Month): 4 ()
Pages: 850-864

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Handle: RePEc:eee:chieco:v:23:y:2012:i:4:p:850-864
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  1. Robert C. Feenstra & Chang Hong, 2007. "China's Exports and Employment," NBER Working Papers 13552, National Bureau of Economic Research, Inc.
  2. Mary Amiti & Caroline Freund, 2010. "The Anatomy of China's Export Growth," NBER Chapters, in: China's Growing Role in World Trade, pages 35-56 National Bureau of Economic Research, Inc.
  3. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
  4. Rodrik, Dani, 2006. "What's So Special about China's Exports?," Working Paper Series rwp06-001, Harvard University, John F. Kennedy School of Government.
  5. Ng, Francis & Yeats, Alexander, 1999. "Production sharing in East Asia : who does what for whom, and why?," Policy Research Working Paper Series 2197, The World Bank.
  6. Peter K. Schott, 2008. "The relative sophistication of Chinese exports," Economic Policy, CEPR;CES;MSH, vol. 23, pages 5-49, 01.
  7. David Hummels & Jun Ishii & Kei-Mu Yi, 1999. "The nature and growth of vertical specialization in world trade," Staff Reports 72, Federal Reserve Bank of New York.
  8. Ng, Francis & Yeats, Alexander, 2003. "Major trade trends in East Asia : what are their implications for regional cooperation and growth," Policy Research Working Paper Series 3084, The World Bank.
  9. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643, June.
  10. Dean, Judith & Fung, K.C. & Wang, Zhi, 2008. "How vertically specialized is Chinese trade?," BOFIT Discussion Papers 31/2008, Bank of Finland, Institute for Economies in Transition.
  11. 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.
  12. Yun-Wing Sung, 2007. "Made in China: From World Sweatshop to a Global Manufacturing Center?," Asian Economic Papers, MIT Press, vol. 6(3), pages 43-72, October.
  13. Xikang Chen & Ju-e Guo & Cuihong Yang, 2005. "Extending the input-output model with assets," Economic Systems Research, Taylor & Francis Journals, vol. 17(2), pages 211-225.
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