Domestic Value Chains in the People's Republic of China and Their Linkages with the Global Economy

Abstract

Attempts to understand the role of the People's Republic of China (PRC) in global value chains often note the case study of Apple's supply chain, in particular the fact that the PRC contributes no more than 4% of the value added in the production of the iPhone. However, the PRC's share in total induced value added in exports of final products shipped to the United States was more than 75% in 2005. This leads us to investigate how the PRC's value added is created and distributed not only internationally but also domestically. This chapter focuses on measuring domestic value chains (DVCs) in the PRC and their linkages with global markets. By using interregional input–output tables, we can understand structural changes in domestic trade in value added, as well as the position and degree of participation of different regions within the DVCs. We also use our measurements to discuss the PRC's regional economic performance and policy orientation.