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How did China rise its manufacturing domestic value added in exports through GVC moving up?

Author

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  • Ping Hua

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

Abstract

Despite its high implication into global value chains (GVCs), the Chinese real domestic value added in exports increased at an annual average growth rate of 14% over the 2000-2016 period and its ratio from 65% to 83%. To understand this evolution, a GVC augmented function of domestic value added in exports is proposed and estimated using panel data of 16 Chinese manufacturing sectors over the 2005-2014 period from OCDE TiVA and WIOD databases. Besides the traditional positive effects of labor productivity, capital intensity and employment on domestic value added in exports, we find that China's GVC positon improvement through withdrawing backward links and increasing forward links exerted positive effects. The negative elasticity of backward links multiplied by the decreasing share of foreign value added and by its indirect productivity effect contributed to increase Chinese domestic value added in exports. This contribution is 3.5 times higher than that of GVC forward links, measured as the product of the positive elasticity of forward links multiplied by the increasing share of exports of intermediate goods embodied to exports of third countries. This successful moving up from low cost labor-intensive processing and assembly to relatively higher value-added intermediated goods decreased the risk of being stuck in low-value-added tasks, while the future one should be much more complicated in the context of increasing trade protectionism.

Suggested Citation

  • Ping Hua, 2021. "How did China rise its manufacturing domestic value added in exports through GVC moving up?," Working Papers hal-03373508, HAL.
    • Handle: RePEc:hal:wpaper:hal-03373508
    Note: View the original document on HAL open archive server: https://hal.science/hal-03373508v1
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    References listed on IDEAS

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    Keywords

    China; domestic value added; global value chains JEL: F15; F41; F62;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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