Abstract
China’s exports can be divided into three types: processing trade, normal trade of goods, and normal trade of services. Based on China’s non-competitive input–output table that captures the processing trade, we calculated domestic value added (DVA) in exports for 2002, 2007, and 2010. We then used structural decomposition analysis to examine six factors that could be the driving forces of changes in DVA for exports under the three kinds of trade in the periods 2002–2007 and 2007–2010. The results show that the six driving forces have different effects on exported DVA. Normal trade is the dominant contributor to the increased DVA of China’s exports. The increase in DVA generated by exports is due mainly to the expansion of export volume. The most effective way to increase exported DVA sustainably is to expand fabrication effects.
Highlights
After China joined the WTO at the end of 2001, its foreign trade rapidly expanded
3.1 Analysis of changes in China’s domestic value added (DVA) driven by exports Based on the 41 sectors in China’s DPN tables for 2002, 2007, and 2010, we estimated DVA embedded in total trade, processing trade, normal trade in goods, and normal trade in services (Table 2)
We found that exports in normal trade of goods were the major contributor to these DVA increases
Summary
After China joined the WTO at the end of 2001, its foreign trade rapidly expanded. Foreign trade has become one of the most important driving forces for China’s rapid economic growth. By 2012, the share of gross exports in China’s GDP grew slightly to 27.2%, but in absolute terms reached $2.2 trillion, or five times the total of 2002, for an average annual growth rate of 20% over those 10 years. This growth rate was much higher than that of GDP. The total value added is shared by many countries and regions instead of only the final exporters With these changes in trade characteristics, the standard trade statistics on gross exports no longer give accurate measures of the true value that a country gained from foreign trade.
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