Linkage effect of virtual water trade in China’s industrial products—based on generalized hypothetical extraction method

Abstract

At present stage, there is increasingly desperate contradiction in China’s water supply and demand. Importing virtual water by the import of agricultural products (industrial products) from other countries may be a possible way to alleviate it. Based on the Input-Output Table and relevant data in using water resources, this paper accounts China’s virtual water trade volume in 2012 systematically and does a research on industrial linkage effect of China. Results show that: (1) There is a net export of virtual water in China in 2012, while there is a large amount of net import of virtual water in agriculture. (2) The linkage between agriculture and the other industries has great influence on both imports and exports volume of china’s virtual water. After extraction, the virtual water imports volume only accounts for 66.33% of that before extraction; at the same time, the virtual water exports volume only account for 49.00% of that before extraction. Among them, the linkage effect between food production and tobacco processing industry and agriculture is the largest. The result shows that there is a certain degree of failure of virtual water trade strategy to relieve the contradiction of supply and demand of water resources through the virtual water net imports. Therefore, it is necessary to expand agricultural imports appropriately which requires more water consumption and moderately reduce agricultural exports. At the same time, we should consider the linkage effect between agriculture and other industries, and synchronously adjust the import and export of other industries, especially the food production and tobacco processing industry.