China's trade in value-added and its driving factors: an empirical analysis based on multi-region input-output model
(2.School of Economics and Management at Wuhan University)
(3.International Business School at Sichuan International Studies University.)
【Abstract】From the perspective of decomposition of value sources of final consumption goods, this paper estimates and analyzes China's trade in value-added during 1995–2011 based on the world input-output database and multi-region input-output model from three dimensions (including total trade, country and industry), and employs structural decomposition analysis to investigate the driving factors of growth in trade in value-added. It is found that: (1) generally there is a rapid growth in China's import, export and surplus in trade in value-added; (2) China's main trade partners are the developed economies such as the United States, Europe and Japan, while the share of emerging economies is rapidly increasing; (3) China's import and export are both concentrated on knowledge-intensive manufactures, especially in electronic and optical devices, while the import of primary goods and resource products is on an apparent increase. Results of SDA suggest that China's growth of import in trade in value-added mainly stems from the expansion of its domestic demand, while the export growth mainly results from the demand growth in other economies, their adjustment of demand structure, and improvement in the international competitiveness of China's intermediate products.
【Keywords】 global value chain; trade in value-added; multi-region input-output model; structural decomposition analysis;
. Editor's note: Any “country” related to Taiwan in this paper should be “country (region).” [^Back]
. ①In this paper, China refers solely to Chinese mainland excluding such areas as Hong Kong SAR, Macao SAR, and China's Taiwan, and the same below. [^Back]
. ②Current inter-country input-output databases include UNCTAD-Eora GVC Database, inter-country input-output model (ICIO model), Asian international input-output table, global trade analysis program (GTAP) and world input-output database (WIOD). Sources: UNCTAD (2013). [^Back]
. ③Sources: http://www.wiod.org/ WIOTs have reported the domestic and inter-country input and output of intermediate products and final products in 35 sectors, and direct value added as well as final output in each sector of all countries. [^Back]
. ④The 41 countries and areas include: 27 European Union countries, three countries of North American Free Trade Area, four BRIC countries (South Africa excluded), Japan, the Republic of Korea, Chinese Taiwan, Australia, Indonesia, Turkey and other areas in the world. It is worth mentioning that the gross domestic product of 40 countries and areas apart from other areas in the world accounted for 86.14% of global GDP, which, therefore, can fairly reflect the world production pattern and trade pattern. The output data of other areas stem from the balance between the world total output and that of the 40 countries above. The value-added and trade flow input coefficient originate from the average volume of China, Brazil, India, Indonesia and Mexico. The formation of WIOD is based on official data in each country, which is of relatively high matching degree with national accounts in each country. [^Back]
. ⑤In WIOTs, the final consumption includes five parts, namely, family consumption, government consumption, non-profit organization consumption, fixed capital formation and inventory, which are not differentiated in the model but integrated as a country's final consumption. [^Back]
. ⑥This paper, due to space limitations, did not list all data of China's trade in value-added on total volume, nationality and sectors. If needed, please contact the authors of this paper. [^Back]
. ⑦35 industries of world input-output tables are divided into 8 industries based on the factor intensity, see Fan Maoqing and Huang (2014) for details. [^Back]
Chen, W. & Li, Q. Finance & Trade Economics (财贸经济), (7) (2014).
Fan, M. & Huang, W. The Journal of World Economy (世界经济), (2) (2014).
Jiang, X. & Liu, S. Journal of International Trade (国际贸易问题), (11) (2014).
Lin, L. & Yu, J. Modern Economic Science (当代经济科学), (9) (2012).
Lu, J., Xiang, L. & Yang, X. Journal of China University of Geosciences (social sciences edition) (中国地质大学学报(社会科学版)), (1) (2013).
Peng, S., Zhang, W. & Sun, C. Economic Research Journal (经济研究), (1) (2015).
Tang, D. Management World (管理世界), (12) (2012).
Wang, L. Statistical Research (统计研究), (5) (2014).
Zhang, J., Chen, Z. & Liu, Y. Economic Research Journal (经济研究), (10) (2013).
Hummels, D. Ishii, J. and Yi K M., (2001) “The Nature and Growth of Vertical Specialization in World Trade,” Journal of International Economics 54, 75–96.
Johnson, R C.; Noguera, G.,(2012) “Accounting for Intermediates: Production Sharing and Trade in Val ue Added,” Journal of International Economics 86, 224–236.
Kee, H. L. and Tang, H.,(2012) “Domestic Value Added in Chinese Exports,” Working Paper, World Bank and Tufts University.
Koopman, R. Powers, W. Wang Z, et al., (2010) “Give Credit Where Credit is Due: Tracing Value Added in Global Production Chains,” National Bureau of Economic Research No. 16426.
Koopman R. Wang Z. Wei S J.,(2012) “Estimating Domestic Content in Exports When Processing Trad is Pervasive,” Journal of Development Economics.
Stehrer, R. Foster, N. de Vries, G., (2010) “Value Added and Factors in Trade: A Comprehensive Ap proach,” Dynamics 67.
Stehrer, R., (2012) “Trade in Value Added and the Value Added in Trade,” WIOD WPN, 8.
UNCTAD., (2013) “Global Value Chains Investment and Trade for Development,” World Investment Report.
Upward, R. Wang, Z. and Zheng, J., (2013) “Weighing China's Export Basket: The Domestic Content and Technology Intensity of Chinese Exports,” Journal of Comparative Economics 41(2), 527–543.