Structural analysis of material flows in China based on physical and monetary input-output models

Abstract

The physical input-output (PIO) model has different product flow scopes from the monetary input-output (MIO) model. Using the PIO and MIO models to analyze the structure of material flows can identify new hotspots for policy decisions over each other. However, PIO models are not well-studied in existing studies on the structure of China's material flows. This study uses both the PIO and MIO models to analyze consumption-based material flows of Chinese sectors and critical supply chain paths leading to China's material flows. Results show that the PIO and MIO models validate each other by simultaneously identifying critical sectors and important final demand categories. However, product prices and the treatment of services lead to different findings based on the MIO and PIO models. Compared with the PIO model, the MIO model underestimates the contribution of the construction sector to China's material flows, but overestimates that of the equipment and machinery and other services sectors. The PIO model reveals the higher importance of rural household consumption, while the MIO model identifies more critical supply chain paths associated with services. The PIO and MIO models can complement each other in the implementation and assessment of environmental measures (e.g., production efficiency improvement).