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China’s Regional Economies and Value Chains: An Interregional Input-Output Analysis

Discussion Papers


by Bo MENG, Yaxiong ZHANG, Jiemin GUO, Yong FANG
July 2012


Attempts to understand China’s role in global value chains have often noted the case of Apple's iPhone production, in particular the fact that the value added during the Chinese portion of the iPhone’s supply chain is no more than 4%. However, when we examine the Chinese economy as a whole in global production networks, China’s share in total induced value added by China’s exports of final products to the USA is about 75% in 2005. This leads us to investigate how Chinese value added is created and distributed not only internationally but also domestically. To elucidate the increasing complexity of China’s domestic production networks, this paper focuses on the measure of Domestic Value Chains (DVCs) across regions and their linkages with global markets. By using China’s 1997 and 2007 interregional input-output tables, we can understand in detail the structural changes in domestic trade in terms of value added, as well as the position and degree of participation of different regions within the DVCs.

Keywords: Trade in value added, value chain, vertical specialization, comparative advantage
JEL classification: C6, F4, O18

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