Transmission and Diffusion Effect of Sino-US Trade Friction along Global Value Chains

Xiaojuan Wang and Benye Shi

Finance Research Letters, 2022, vol. 46, issue PA

Abstract: This paper explores the transmission of Sino-US trade friction under the GVC division of labor and its diffusion effect from the perspective of third-country's value-added embedded in China's export to the US. It turns out that Sino-US bilateral trade shock may have a multilateral effect in the age of GVCs. The increase of US tariff on China will significantly reduce the value-added rate of trade partner and the third-countries embedded in China's exports to the US, thus making the impact of Sino-US trade shock pass on the countries along the GVCs. Besides, this “ripple effect” is especially notable through processing trade in Asian regional value chains and non-OECD countries. The conclusions of this paper have certain enlightenment significance to the current Sino-U.S. trade friction.

Keywords: Sino-US trade frictions; Global value chains; International production linkages; Risk diffusion (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321001380

DOI: 10.1016/j.frl.2021.102057

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