The chasing dragon: to what extent and how does China catch up with USA under global value chains?

An indisputable fact in Global Value Chains (GVCs) is the rapid catching-up of China with U.S.A.; however, the convergence speed and depth have yet remained to be explored. On the one hand, the heterogeneity of different business functional activities, i.e. management, R&D, marketing and fabrication, is barely discussed. On the other hand, the international income transfers further complicate catching-up issue, since wedge between value-added and national income exists. Taking account of both them in a global multi-country input-output setting enables us to better understand the speed and depth of catching-up for China vis-à-vis U.S.A. China has made progress on narrowing the gap, albeit slowing down in the mid-2010s, but far from complete. This convergence speed is unevenly proceeded across business functions/industries. Similar catching-up finding holds for our new national income approach, but to a lesser extent. GVC participation scale enlarging and productivity improvement jointly lead to this catching-up, wherein scale contributes more than does productivity. We also find that the scale role is quite heterogeneous across business functions and industries. Despite catching-up in productivity at all levels, but starting from an extremely low level, a major lagging productivity gap remains. Also, the increasingly important role of productivity is observed.