China’s Processing Trade and Value Chains

Lili Yan Ing, Wei Tian and Maiojie Yu

No DP-2018-02, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: We investigate how trade liberalisation affects the performance of Chinese manufacturing firms. To better understand China’s role in global value chains, we examine Chinese firms with a significant import share from Indonesia, one of its largest processing source countries. We find that Chinese firms with a greater import share from Indonesia perform better in productivity, export, and sales, and they are more likely to engage in processing exports. Moreover, the impact of foreign trade liberalisation on China’s export scope is more pronounced for firms with a larger import share from Indonesia because of their greater extent of engagement in global value chains.

Keywords: trade liberalisation; firm performance; processing trade (search for similar items in EconPapers)
JEL-codes: F1 F13 F14 (search for similar items in EconPapers)
Pages: 25 pages.
New Economics Papers: this item is included in nep-int and nep-sea
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