Has the rise of China’s domestic supply chain contributed to its GDP increases?

Yun-Peng Chu and Yi-Pey Ou

Applied Economics, 2023, vol. 55, issue 12, 1298-1311

Abstract: This paper applies a structural decomposition of the input-output tables to investigate the sources of changes in the GDP of China, paying special attention to the import substitution of intermediate inputs. It is argued that the specific way GDP is decomposed in this paper sheds more light on the origin of growth than does the conventional decomposition of GDP by its final demand components. The results of the decomposition show that import substitution of intermediate products, which is an act of de-globalization of trade and a model of industrialization some Asian newly industrializing economies followed decades earlier, also became important in China, but only belatedly: in 2011–2012 and 2013–2014. The phenomenon is found to be significant in the manufacture of (i) computer, electronic and optical products, (ii) chemicals and chemical products, (iii) coke and refined petroleum products, and (iv) basic metals.

Date: 2023
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DOI: 10.1080/00036846.2022.2097182

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