China's trade in value-added and its driving factors: an empirical analysis based on multi-region input-output model

GE Ming1 LIN Ling2 ZHAO Suping3

(1.School of Economics and Management at Southwest University)
(2.School of Economics and Management at Wuhan University)
(3.International Business School at Sichuan International Studies University.)
【Knowledge Link】Ilulissat Declaration; UNCTAD

【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;

【DOI】

【Funds】 Special Fund for Basic Research of the Central Higher Education Institutions (SWU1509516) General Project of the National Social Science Foundation of China (11BJY113); Youth Project of the National Social Science Foundation (14CJY083)

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    Footnote

    [1]. Editor's note: Any “country” related to Taiwan in this paper should be “country (region).” [^Back]

    [2]. 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]

    [3]. 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]

    [4]. 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]

    [5]. 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]

    [6]. 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]

    [7]. 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]

    [8]. 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]

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This Article

ISSN:1002-4670

CN: 11-1692/F

Vol , No. 12, Pages 3-14

December 2015

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Abstract

  • Introduction
  • 1 Review of measurement methods
  • 2 Model Building and Data Specification
  • 3 Empirical result analysis
  • 4 Major conclusions and policy implications
  • Footnote

    References