Cross-hauling and regional input-output tables: the case of the province of Hubei, China

Data for the Chinese province of Hubei are used to assess the performance of Kronenberg's CHARM, a method that takes explicit account of cross-hauling when constructing regional input-output tables. A key determinant of cross-hauling is held to be the heterogeneity of the products of individual sectors, which is estimated using national data. However, contrary to the authors' earlier findings for Finland, CHARM does not generate reliable estimates of Hubei's sectoral exports, imports and the volume of trade. This outcome is attributed to the difficulty of getting satisfactory estimates of net exports and the degree of heterogeneity for this data set. This problem is, in turn, linked to the relatively small size of the region under examination, which generates around four percent of China's GDP. Nevertheless, CHARM does yield reasonable estimates of sectoral supply multipliers. It is suggested that the poor simulation of Hubei's trading patterns is due to the difficulty, in this instance, of constructing a regional input-output table using national data, rather than to any theoretical shortcomings of the method as such.