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China’s Integration in East Asia:Production Sharing, FDI & High-Tech Trade

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Abstract

China has taken advantage of the globalisation process and has become an assembly country for firms in Asia, which have extended their production and trade networks to China. China’s position in the segmentation of the production processes has fostered its trade in high-technology products. However the rapid technological upgrading of China’s trade is associated with an increasing dependence on foreign capital and technology. The emergence of China has led to the reorganisation of production in Asia and to a triangular trade pattern: firms in advanced Asian economies use China as an export base and instead of exporting finished goods to the US and Europe, now export intermediate goods to their affiliates in China.

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Notes

  1. Average of exports and imports (source, CEPII-CHELEM).

  2. Foreign affiliates include joint ventures and wholly-foreign-owned firms.

  3. NIEs: Hong Kong, Singapore, South Korea and Taiwan.

    ASEAN* = ASEAN countries excluding Singapore.

  4. According to OECD statistics on international investment flows, China accounted for less than one per cent in the stock of investment abroad of the US and of most European countries; 5% in the case of Japan and 15% in the case of South Korea.

  5. http://www.wcoomd.org

  6. For sector classification see Gaulier, Lemoine, Ünal-Kesenci (2005).

  7. “Foreign affiliate” in this paper encompasses all firms with foreign capital: joint ventures and firms in which foreign investors hold 100% of capital.

  8. For the definition of the stages of production used in this section see Gaulier, Lemoine, Ünal- Kesenci (2005).

  9. Structural deficit (surplus) is measured by the indicator of contribution to trade balance, see Gaulier, Lemoine, Ünal-Kesenci (2005).

  10. For the classification of high-tech products, see Gaulier, Lemoine, Ünal-Kesenci (2005).

  11. Japan, NIEs (HK, Taiwan, Korea, Singapore), ASEAN* (Indonesia, Malaysia, Philippines, Thailand, Vietnam, Lao, Cambodia, Brunei).

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Authors and Affiliations

  1. Centre d’Etudes Prospectives et d’Informations Internationales (CEPII), 9, rue Georges Pitard, Paris, 75015, France

    Guillaume Gaulier, Françoise Lemoine & Deniz Ünal-Kesenci

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  1. Guillaume Gaulier
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  2. Françoise Lemoine
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  3. Deniz Ünal-Kesenci
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Correspondence to Françoise Lemoine.

Additional information

This article is a slightly revised version of the CEPII working paper n°2005–09 (http://www.cepii.fr/anglaisgraph/workpap/summaries/2005/wp05-09.htm)

Guillaume Gaulier is economist, Françoise Lemoine is senior economist and Deniz Ünal-Kesenci is economist at CEPII (see www.cepii.fr)

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Gaulier, G., Lemoine, F. & Ünal-Kesenci, D. China’s Integration in East Asia:Production Sharing, FDI & High-Tech Trade. Econ Change 40, 27–63 (2007). https://doi.org/10.1007/s10644-007-9013-5

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