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Global Value Chains and China's Exports to High Income Countries

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  • Yuqing Xing

    (National Graduate Institute for Policy Studies)

Abstract

This paper argues that global value chains (GVCs) have functioned as a vehicle for “Made in China” products to enter international markets, especially the markets of high income countries. It identifies three spillover effects to Chinese firms participating in GVCs: brands, distribution networks and lead firms’ technology innovations. By participating in GVCs, Chinese firms are able to bundle low skilled labor services with advanced technologies and globally recognized brands, and then sell their low value added services to the consumers of international markets. The competitiveness of China’s processing exports is largely determined by more than 50% of foreign contents embedded in the exports. Using the panel data of bilateral processing exports covering more than 100 China’s trade partners, it shows there exists a significantly positive correlation between the share of processing exports and the income of trading partners, implying that processing trade is an effective means for “Made in China” products to enter high income countries. The cross-country heterogeneity of processing exports also indicates China captures relatively more value added in its exports to low income countries than to high income countries.

Suggested Citation

  • Yuqing Xing, 2015. "Global Value Chains and China's Exports to High Income Countries," GRIPS Discussion Papers 15-06, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:15-06
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    References listed on IDEAS

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    Cited by:

    1. THORBECKE, Willem, 2015. "Understanding the Evolution of Japan's Exports," Discussion papers 15131, Research Institute of Economy, Trade and Industry (RIETI).
    2. Xing, Yuqing, 2018. "Rising wages, yuan's appreciation and China's processing exports," China Economic Review, Elsevier, vol. 48(C), pages 114-122.
    3. Thorbecke, Willem, 2017. "How Would a Slowdown in the People’s Republic of China Affect its Trading Partners?," ADBI Working Papers 634, Asian Development Bank Institute.
    4. Ma Degong & Farid Ullah & Muhammad Sualeh Khattak & Muhammad Anwar, 2018. "Do International Capabilities and Resources Configure Firm’s Sustainable Competitive Performance? Research within Pakistani SMEs," Sustainability, MDPI, vol. 10(11), pages 1-16, November.

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