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Global Value Chains and Systemic Risk: Evidence from China and the G7 Countries

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  • Siyu Zhu
  • Yong Li
  • Tong Niu

Abstract

This study aims to explore systemic risk contagion from the upstream and downstream linkages of the global value chains (GVCs). Using stock market data and multi-regional input-output tables (MRIO) of 83 industries in eight countries during 2013–2021, systemic risk is found to mostly emerge from core supplier-customer network industries, subsequently spreading across intermediate goods and capital chains. Owing to proximity, risk contagion is stronger within the same country or industry; during major public events (MPEs), the effect of linkages on risk contagion is greater. Further, we find that the propagation of systemic risk varies over time; long-term systemic risk follows a transmission path which correlates with the industry’s GVC position; geopolitics and economic policy uncertainty can increase short-term systemic risk. We also propose policy recommendations for managers, regulators, and investors.

Suggested Citation

  • Siyu Zhu & Yong Li & Tong Niu, 2025. "Global Value Chains and Systemic Risk: Evidence from China and the G7 Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 61(5), pages 1387-1402, April.
    • Handle: RePEc:mes:emfitr:v:61:y:2025:i:5:p:1387-1402
    DOI: 10.1080/1540496X.2024.2415330
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