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Processing Trade Biases The Measurement Of Vertical Specialization In China

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  • Cuihong Yang
  • Erik Dietzenbacher
  • Jiansuo Pei
  • Xikang Chen
  • Kunfu Zhu
  • Zhipeng Tang

Abstract

Vertical specialization (VS) is often measured by the import contents of the exports, using an input-output (I-O) framework. Half of China's exports are processing exports, which largely depend on imported intermediate inputs and tie up upstream as well as downstream trade partners. Thus, one would expect to find strong VS for China. Using the 'ordinary' I-O tables, however, this is not the case. Because the production of processing exports is only a small part of total production, the average input structure in the I-O table hides the typical features of processing exports. Using adapted, tripartite I-O tables (for 2002 and 2007) in which the processing exports have been singled out, indeed reveals the expected strong VS in China.

Suggested Citation

  • Cuihong Yang & Erik Dietzenbacher & Jiansuo Pei & Xikang Chen & Kunfu Zhu & Zhipeng Tang, 2015. "Processing Trade Biases The Measurement Of Vertical Specialization In China," Economic Systems Research, Taylor & Francis Journals, vol. 27(1), pages 60-76, March.
    • Handle: RePEc:taf:ecsysr:v:27:y:2015:i:1:p:60-76
    DOI: 10.1080/09535314.2014.955463
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    10. Yuwan Duan & Yanping Zhao & Jakob Haan, 2020. "Exchange Rate Pass-through in China: A Cost-Push Input-Output Price Model," Open Economies Review, Springer, vol. 31(3), pages 513-528, July.
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    14. Maritza Sotomayor, 2016. "Vertical Specialization of Production: Critical Review and Empirical Evidence for the Mexican Manufacturing Industries 1994-2014," International Journal of Business and Social Research, LAR Center Press, vol. 6(2), pages 11-28, February.
    15. Duan, Yuwan & Dietzenbacher, Erik & Los, Bart & Yang, Cuihong, 2021. "How much did China's emergence as “the world's factory” contribute to its national income?," China Economic Review, Elsevier, vol. 69(C).
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