Chinese production chains rely increasingly on domestic services

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Title: Chinese production chains rely increasingly on domestic services
Author: Simola, Heli
Organization: Suomen Pankki
Bank of Finland
Department / Unit: Siirtymätalouksien tutkimuslaitos (BOFIT)
Institute for Economies in Transition (BOFIT)
Series: BOFIT Policy Brief
Series number: 4/2017
Year of publication: 2017
Publication date: 18.4.2017
Published in: Forthcoming in Asian Economic Papers
Pages: 22
Subject (yso): tuotantoketjut; tuotanto; palvelut
Keywords: Bofit-kokoelma; kansainvälinen; Kiina
Other keywords: China; international production chains; input-output
Abstract: We examine the international fragmentation of production chains in different countries using international input-output tables with a focus on China. We explore the development of main macro-level trends established in the previous literature with the most recent data available and compare Chinese production chains to those of other countries. We find that while international fragmentation of value chains has increased notably in other countries during 2000–2014, in China it has turned to decline in the latter part of the time period. The share of domestic value added has increased both in Chinese manufacturing and business service chains. The role of services has increased in the value chains of all countries, but even more pronouncedly in China mainly due to higher contribution from domestic services. Comparing globalization as opposed to regionalization in production chains shows that for most countries globalization has increased. A notable exception are other Asian countries than China, where value chains have instead become increasingly regional. Both these trends are largely due to the increased role of China in international production chains.

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