Estimating the Upper Limits of Value Added in the People's Republic of China's Processing Exports

Yuqing Xing

Chapter 4 in Uncovering Value Added in Trade:New Approaches to Analyzing Global Value Chains, 2015, pp 61-79 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We apply a direct approach to estimate domestic value added embedded in the People's Republic of China's (PRC) processing exports. The estimates suggest that the domestic value added of processing exports and processing high-tech exports gradually increased from 30% and 25% to 44% and 45%, respectively, between 1997 and 2012. On the other hand, the domestic content of processing exports with supplied materials fell to 14% from its peak at 35%. In 2012, the domestic value added of the PRC's total exports remained below 77%. Compared to our estimates, OECD's TiVA database significantly overestimates the domestic content of the PRC's exports. TiVA's estimates are also inconsistent with the fact that the share of processing exports in the PRC's total exports has decreased steadily. In addition, we show that the PRC's processing exports demonstrate significant heterogeneity across its trading partners; processing exports account for a large portion of total exports to high-income countries but a relatively small portion of exports to low-income countries.

Keywords: Trade; Global Value Chains; Production Networks; Input-output Method; Trade Statistics; Trade Measurement; Trade in Value-Added; Domestic Value-Added; Production Fragmentation; Global Assembly; Trade Relations; Foreign Direct Investment; Manufacturing (search for similar items in EconPapers)
Date: 2015
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