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Peer reviewed
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Upward, Richard; Wang, Zheng; Zheng, Jinghai
Journal of Comparative Economics, 05/2013, Volume: 41, Issue: 2Journal Article
► Our estimation of vertical specialisation takes into account the speciality of processing trade, using linked firm-transaction data. ► Processing exporters have value-added shares 50% lower than non-processing exporters. ► The increased sophistication of Chinese exports has been largely driven by within-industry skill and technology improvement. In this paper we use new, detailed, and comprehensive linked firm-transaction data to measure the domestic content and technology intensity of Chinese exports over the period 2000–2007. We evaluate the extent of value-added in China’s exports, using a modification of a method proposed by Hummels et al. (2001) which takes into account the prevalence of processing firms. In addition, we provide new estimates of the skill-and technology-intensity of China’s exports. Our estimates of value-added suggest that the domestic content of China’s exports increased from only 53% to about 60% over the period 2003–2006. Our cross-firm analysis reveals that processing exporters have value-added shares approximately 50% lower than non-processing exporters, even after accounting for ownership, location, and industry. We also show that Chinese exports have become increasingly sophisticated, largely driven by skill and technology improvement within industries.
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