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Distinguishing China's processing trade in the world input-output table and quantifying its effects

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  • Quanrun Chen
  • Kunfu Zhu
  • Peng Liu
  • Xiangyin Chen
  • Kailan Tian
  • Lianling Yang
  • Cuihong Yang

Abstract

Distinguishing processing trade is crucial to national input-output table-based research on China's international trade. This paper further investigates the importance of distinguishing China's processing trade in multicountry input-output table-based studies. We focus on the bias in China's bilateral trade in value added caused by China's undistinguished processing trade. We construct a product-by-product world input-output table capturing China's processing trade based on the World Input-Output Database. Empirical studies show that, if China's processing trade is undistinguished, the profile of China's bilateral trade in value added would be seriously distorted; China's bilateral net trade in value added with some economies, such as Japan, Korea and Taiwan, would be significantly underestimated, while it would be significantly overestimated for some other economies, such as the United States. Distinguishing processing trade in multicountry input-output tables is also crucial when China's bilateral trade in value added is considered.

Suggested Citation

  • Quanrun Chen & Kunfu Zhu & Peng Liu & Xiangyin Chen & Kailan Tian & Lianling Yang & Cuihong Yang, 2019. "Distinguishing China's processing trade in the world input-output table and quantifying its effects," Economic Systems Research, Taylor & Francis Journals, vol. 31(3), pages 361-381, July.
    • Handle: RePEc:taf:ecsysr:v:31:y:2019:i:3:p:361-381
    DOI: 10.1080/09535314.2018.1534225
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    Cited by:

    1. López, Luis Antonio & Arce, Guadalupe & Jiang, Xuemei, 2020. "Mapping China's flows of emissions in the world's carbon footprint: A network approach of production layers," Energy Economics, Elsevier, vol. 87(C).
    2. Tian, Kailan & Dietzenbacher, Erik & Yan, Bingqian & Duan, Yuwan, 2020. "Upgrading or downgrading: China's regional carbon emission intensity evolution and its determinants," Energy Economics, Elsevier, vol. 91(C).
    3. Zhong, Jiarui & Pei, Jiansuo, 2022. "Beggar thy neighbor? On the competitiveness and welfare impacts of the EU's proposed carbon border adjustment mechanism," Energy Policy, Elsevier, vol. 162(C).

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