China's embodied oil outflow in GVC participation: Patterns and drivers

As China actively participates in global value chains, creating a huge trade surplus, which makes a large amount of embodied oil flow overseas along with the "Made in China" products. Based on the multi-region input‒output (MRIO)model, the global value chain (GVC) accounting method was used to fully characterize China's embodied oil outflow in different trade patterns and the structural decomposition analysis was applied to clarify the performance of influencing factors at the country and sector levels. The results show that China's massive embodied oil outflow was mainly driven by exports of low-tech, low-value-added intermediate and final goods, which further reduced the potential profits and sustainability of China's foreign trade in the context of high oil acquisition costs and uncertainty. Fortunately, the embodied oil cost per unit of export value added showed an ongoing downward trend. Meanwhile, the upgrading of “electrical, electronic and optical equipment” also partly promoted the decline of the embodied oil cost in the intermediate goods trade. In addition, the effect of industrial structure adjustment gradually tended to drive embodied oil outflow as China's domestic supply network continued to expand since financial crisis in 2008. These findings have important implications for the implementation of effective policies to reduce China's embodied oil outflow.