Tracing China's virtual water trade in global value chain: Participation, characteristics, and inequality

Abstract

The disclosure of global value chain (GVC) division and cooperation is essential for the rational allocation of water resources and the achievement of trade equality, particularly as the global division of labor becomes more pronounced. Currently, there are limited studies on the global value chain at the sub-national level, with most focusing on virtual water trade (VWT) characteristics between two trading partners, without integrating VWT into the global value chain and overlooking significant cooperation among participants. Here, we characterize the international division of GVC and VWT patterns covering 194 regions (31 regions in China and 163 countries) around the world in 2020, and then examine the inequality between virtual water (VW) and value-added (VA) transfer from both environmental and economic perspectives, focusing on the sub-national scale of China. Our results show that in terms of water consumption responsibilities, considerable heterogeneity can be seen in different regions across China. Furthermore, relying solely on the export of primary products for economic development will lead to inequality in trade between countries. In this study, we trace the characteristics of VWT, taking into account the participation and contribution of regions in numerous GVC linkages. In addition, to make our policy implications more targeted, we refine the study resolution to the sub-national scale. Our results suggest that countries should prioritize consumer responsibility in GVC, reduce the drawbacks of trade barriers, and dispassionately exploit the economic and environmental advantages of water resources.