Working Paper: NBER ID: w13771
Authors: Zhi Wang; Shangjin Wei
Abstract: Chinese exports have become increasingly sophisticated. This has generated anxiety in developed countries as competitive pressure may increasingly be felt outside labor-intensive industries. Using product-level data on exports from different cities within China, this paper investigates the contributing factors to China's rising export sophistication. Somewhat surprisingly, neither processing trade nor foreign invested firms are found to play an important role in generating the increased overlap between China's export structure and that of high-income countries. Instead, improvement in human capital and government policies in the form of tax-favored high-tech zones appear to be the key to the country's evolving export structure. On the other hand, processing trade, foreign invested firms, and government-sponsored high-tech zones all have contributed significantly to raising the unit values of Chinese exports within a given product category.
Keywords: China; Exports; Sophistication; Human Capital; Government Policies
JEL Codes: F10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| human capital (J24) | export sophistication (F10) |
| high-tech zones (R38) | export sophistication (F10) |
| processing trade outside policy zones (F10) | export sophistication (F10) |
| processing trade (F10) | export sophistication (F10) |
| foreign investment (F21) | export sophistication (F10) |