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Measuring Value Added in the People’s Republic of China’s Exports: A Direct Approach

Author

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  • Xing, Yuqing

    (Asian Development Bank Institute)

Abstract

We apply a direct approach to estimate domestic value added embedded in the People’s Republic of China’s (PRC) exports. The estimates suggest that the domestic value added of processing exports and processing high-tech exports gradually increased from 30% and 25%, to 44% and 45%, respectively, between 1997 and 2012. On the other hand, the domestic content of processing exports with supplied materials fell to 14% from the peak of 35%. In 2012, the domestic value added of the PRC’s total exports remained below 77%. Our estimates prove to be the upper limits of the corresponding trade in value added. Compared to our estimates, the Organisation for Economic Co-operation and Development’s Trade in Value Added database (TiVA) significantly overestimates the domestic content of the PRC’s exports. TiVA’s estimates are also inconsistent with the fact that the share of processing exports in the PRC’s total exports has decreased steadily. In addition, we show that the PRC’s processing exports demonstrate significant heterogeneity across its trading partners; processing exports account for a large portion of total exports to high income countries but a relatively small portion of exports to low income countries. This heterogeneity implies that the domestic content of the PRC’s exports varies significantly by destination.

Suggested Citation

  • Xing, Yuqing, 2014. "Measuring Value Added in the People’s Republic of China’s Exports: A Direct Approach," ADBI Working Papers 493, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0493
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    References listed on IDEAS

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    1. Yuqing Xing & Neal Detert, 2011. "How the iPhone Widens the United States Trade Deficit with the People's Republic of China:," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 66(03), pages 339-350, September.
    2. Xing, Yuqing, 2012. "Processing trade, exchange rates and China's bilateral trade balances," Journal of Asian Economics, Elsevier, vol. 23(5), pages 540-547.
    3. Yuqing Xing & Neal Detert, 2010. "How the iPhone Widens the United States Trade Deficit with the People’s Republic of China," Trade Working Papers 23128, East Asian Bureau of Economic Research.
    4. Yuqing Xing, 2014. "China's High-Tech Exports: The Myth and Reality," Asian Economic Papers, MIT Press, vol. 13(1), pages 109-123, Winter.
    5. Yuqing Xing & Neal Detert, 2010. "How the iPhone Widens the United States Trade Deficit with the People’s Republic of China," Trade Working Papers 23280, East Asian Bureau of Economic Research.
    6. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    7. Koopman, Robert & Wei, Shang-Jin & Wang, Zhi, 2009. "A World Factory in Global Production Chains: Estimating Imported Value Added in Chinese Exports," CEPR Discussion Papers 7430, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Thorbecke, Willem, 2019. "East Asian value chains, exchange rates, and regional exchange rate arrangements," Journal of Asian Economics, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    People’s Republic of China; trade in value added; domestic value added;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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