Global Value Chains and Systemic Risk: Evidence from China and the G7 Countries

Siyu Zhu, Yong Li and Tong Niu

Emerging Markets Finance and Trade, 2025, vol. 61, issue 5, 1387-1402

Abstract: This study aims to explore systemic risk contagion from the upstream and downstream linkages of the global value chains (GVCs). Using stock market data and multi-regional input-output tables (MRIO) of 83 industries in eight countries during 2013–2021, systemic risk is found to mostly emerge from core supplier-customer network industries, subsequently spreading across intermediate goods and capital chains. Owing to proximity, risk contagion is stronger within the same country or industry; during major public events (MPEs), the effect of linkages on risk contagion is greater. Further, we find that the propagation of systemic risk varies over time; long-term systemic risk follows a transmission path which correlates with the industry’s GVC position; geopolitics and economic policy uncertainty can increase short-term systemic risk. We also propose policy recommendations for managers, regulators, and investors.

Date: 2025
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DOI: 10.1080/1540496X.2024.2415330

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