Reassessing China's virtual water trade with a global value chain framework: Participation, inequality and multi-scenario analysis

Abstract

With the rise of global value chain (GVC), traditional accounting methods for virtual water (VW) trade have failed to reflect the inherent VW flow generated by the production of intermediate goods in shared production processes. Here, we reassess China's VW consumption in 2020 based on a new GVC framework, and propose the concept of VW consumption embodied in forward and backward GVC activities (VWF/VWB). We clarify China's role in GVC activities and reveal VWF/VWB inequalities under multiple scenarios. Our results show that the maximum share of VWF and VWB reaches 64.4% and 86.1%, respectively, far exceeding the traditional trade share. China's VWB primarily sources from developing countries in Asia, while VWF primarily serves the United States. VWF/VWB inequalities are exacerbated by China's GVC activities and exhibit considerable variation under multiple scenarios. Our findings provide new insights into reconciling China's GVC participation and narrowing regional disparities in VW consumption.