Abstract

http://ssrn.com/abstract=2013003
 


 



Foreign Value‐Added in China's Manufactured Exports: Implications for China's Trade Imbalance


Jun Zhang


Fudan University - China Center for Economic Studies (CCES)

Dongbo Tang


affiliation not provided to SSRN

Yubo Zhan


affiliation not provided to SSRN

January‐February 2012

China & World Economy, Vol. 20, Issue 1, pp. 27-48, 2012

Abstract:     
Economists have recently become interested in weighting how much domestic value‐added is actually included in China's exports. Formally, the proportion of foreign and domestic contents could be identified by calculating the vertical specialization share using non‐competitive input‐output tables. Applying such a method to the Chinese case, however, would result in a big measurement bias because China has a large share of processing exports, which utilize a disproportionately high percentage of imported intermediates. This paper, by directly employing 2008 trade data for which imported intermediates in both processing and non‐processing trade could be identified by means of various trade patterns, provides a simplified way to estimate the share of foreign/domestic value‐added included in industry‐level manufactured exports. This paper finds that the vertical specialization share of China's processing exports was about 56 percent in 2008, compared to about 10 percent for ordinary exports. It also finds that the sectors that experienced fast expansion of processing exports have a much higher share of foreign contents. Since processing exports account for about half of Chinese exports, the prevailing trade statistics, which focus on gross values rather than the value‐added of exports and imports, has obviously overstated the bilateral trade imbalances, especially between China and the USA.

Number of Pages in PDF File: 22

Keywords: processing trade, trade imbalance, value‐added, vertical specialization

JEL Classification: F10, F14, O10

Accepted Paper Series


Date posted: February 29, 2012  

Suggested Citation

Zhang, Jun and Tang, Dongbo and Zhan, Yubo, Foreign Value‐Added in China's Manufactured Exports: Implications for China's Trade Imbalance (January‐February 2012). China & World Economy, Vol. 20, Issue 1, pp. 27-48, 2012. Available at SSRN: http://ssrn.com/abstract=2013003 or http://dx.doi.org/10.1111/j.1749-124X.2012.01271.x

Contact Information

Jun Zhang
Fudan University - China Center for Economic Studies (CCES) ( email )
China
Dongbo Tang
affiliation not provided to SSRN
No Address Available
Yubo Zhan
affiliation not provided to SSRN
No Address Available
Feedback to SSRN


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