Global or Regional Value Chains? Evidence from China. (September 2019)

• Record Type: Journal Article
• Authors: Fan, Zijie; Zhang, Yabin; Liao, Chun
• Other Names: Partridge Mark D. guest-editor.; Hua Yue guest-editor.
• Is Part Of: International regional science review. Volume 42:Number 5/6(2019)
• Page Start: 459
• Page End: 494
• Publication Date: 2019-09
• Subjects: global value chains -- regional -- domestic value added -- intermediates -- gravity model; Regional economics -- Periodicals; Regional planning -- Periodicals; Regionalism -- Periodicals; 338.9
• DOI: 10.1177/0160017619835900
• Languages: English
• ISSNs: 1552-6925

Abstract

We document the regional characteristics in China's global value chains. In contrast to the previous related literature, we focus on the right definition of domestic value added (DVA) in bilateral–sector exports and study the heterogeneity of the share of DVA finally absorbed abroad in exports (DVA ratio) across bilateral trade partners. We find that China's DVA ratio within the "Asian factory" region is smaller and declines more over time than outside, showing typical regional characteristics of China's value chains. Instead of final exports, intermediate exports play a dominant role in explaining the regional characteristics. This is a new finding. Using a structural gravity model, we find that DVA ratio in intermediates has fallen more across proximate trade partners for China.