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Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry
Based on Global Value Chains
Yulei Zhang1,†, Hui Li1, Fan Zhang1, Hang Zhang2
1. Business School, Dalian University of Finance and Economics, Dalian Liaoning, 116622, China.
2. Dalian Pinti Machinery and Equipment Co., LTD, Dalian Liaoning, 116000, China.
Submission Info
Communicated by Z. Sabir
Received June 15, 2024
Accepted September 25, 2024
Available online November 7, 2024
Abstract
The process of globalization is deepening, and the international division of labor has further evolved from the traditional
pattern into the production mode of global value chains. This paper calculates the degree of participation in the global
value chain of China’s manufacturing industry and analyzes the index of comparative explicit advantage of China’s
manufacturing industry in each category, i.e., the NRCA index. The decomposition method of trade flows of intermediate
goods is used to interpret the value added of trade based on the international input-output table. In accordance with
OECD
industrial classification, subdivide the manufacturing industries and evaluate the overall export competitiveness
of China’s manufacturing industry. Propose the new explicit comparative advantage index (RCA_VA index) and carry
out the overall measurement and the measurement of each technology level industry separately. From the point of view
of the RCA_VA index of China’s manufacturing industry as a whole
1.29 _ 1.44RCA VA
, the range of value changes
is small. The RCA_VA index for low-tech, medium-low-tech and high-tech industries is
1.00 _ 2.00RCA VA
, and
China’s manufacturing industries as a whole, as well as industries at all technology levels, have significant comparative
advantages and a certain degree of competitiveness in the international market. For the development of export
competitiveness of chemical and pharmaceutical products, transportation equipment, and other manufacturing industries,
it is necessary to further enhance the segmentation of manufacturing industries and make targeted improvements.
Keywords: NRCA index; RCA_VA index; Export competitiveness; Trade value added; Global value chain.
AMS 2010 codes: 91B44
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
2
1 Introduction
Since it acceded to the WTO, China has been actively undertaking international industrial transfer by
virtue of its labor cost advantage, rapidly embedding itself in the global value chain and industrial
chain through the development of processing trade and realizing the transformation of the
manufacturing industry from small to large. However, China’s rapid economic development has
endogenously caused the weakening of traditional factor cost advantage, and the traditional
development mode of the manufacturing industry has been seriously challenged [1-3]. To get rid of
the traditional growth bottleneck in the global value chain of the manufacturing industry, it is
necessary to shape the new comparative advantage of the Chinese industry, cultivate the core
competitiveness of the domestic industry, and realize the new advantage of product export [4-5].
Under the conditions of the global value chain division of labor, the export competitiveness of a
country or region is not only reflected in the scale of exports but, more importantly, in the value-
added capacity of exports in the production of the global value chain [6-7]. The export
competitiveness of a country under the global value chain division of labor is the basis and core of its
participation in international trade, reflecting the role of the country’s comparative advantage factors
in the global economy and trade [8-10]. For large economies, export competitiveness should
emphasize more on the endogenous capacity of production and export, i.e., export based on domestic
supporting and manufacturing capacity [11-12]. Therefore, strengthening domestic production and
manufacturing capabilities will lead to an increase in the level of export competitiveness. When the
domestic industry improves its production efficiency, the number of exports increases, and the scale
of supply expands, while the refinement of production technology leads to the improvement of
product quality, and the export of both intermediate and final goods will obtain higher export earnings
[13-16]. Comparing the development level of the world’s major trading powers in international trade
from the perspective of export competitiveness can further clarify how far China’s export
competitiveness is from the goal of building a trading power, which is of certain practical significance
[17-20].
This paper combines the global value chain participation measurement method to develop the
international competitiveness of China’s manufacturing industry in country analysis, subdivided into
labor-intensive, capital-intensive, and technology-intensive industries international competitiveness
in three aspects. The international input-output table and the trade value-added decomposition are
combined to calculate the export competitiveness of China’s 10 subdivided manufacturing industries.
The new explicit comparative advantage index (RCA_VA index) is proposed to analyze the overall
RCA_VA index of China’s manufacturing industry and the RCA_VA index of industries at each
technology level. Combining the analyzed elements, countermeasures and suggestions for improving
the export competitiveness of China’s manufacturing industries are proposed accordingly.
2 China’s manufacturing industry in the context of the evolution of global value chains
2.1 Global value chains and industrial competitiveness
The concept of Global Value Chain (GVC) is derived from the value chain, which divides business
activities into routine and support activities from the perspective of firm competitiveness. A value
chain is a series of value-adding activities that enterprises perform to produce products or services
[21-23].
The comparative advantage of industries among countries (regions) is the basis for the formation of
global value chains, and their position in the global value chain affects the control of the value chain
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
3
and, thus, the ability to capture value. From the beginning, developed countries have the right to
govern global value chains because global trade was initiated by relatively developed countries. The
integration of developing countries into GVCs is facilitated by their endowment advantages, such as
labor and natural resources, and they frequently participate in low-value-added production chains,
such as processing and assembly. Participation in the division of labor in GVCs has both advantages
and disadvantages for developing countries. On one hand, it can promote primitive accumulation,
achieve economic development, and even become one of the developed countries, such as South
Korea and Japan. On the other hand, they may be constrained by developed countries and remain in
the low-value-added segment of the value chain for a long time, forming a “low-end lock-in” and
making it difficult to cross the middle-income trap.
Value-added trade statistics are an addition to traditional trade statistics in the context of the global
value chain division of labor. With the continuous progress of the information technology revolution,
the cost of cross-border trade communication and coordination has greatly reduced. The production
process is not necessarily completed by one country, and the production chain is widely distributed
worldwide after being divided by multinational corporations. The trade of intermediate goods based
on the division of labor of the global value chain is growing rapidly, the international competition has
shifted from the competition of the whole product to the competition of the internal value chain of
the product, and the market share of the products exported from one country is no longer important,
the important thing is what kind of role it plays in the export. The significance lies in the role it plays
in exports, the value-added it creates, the effect it has on economic growth, the number of jobs it
creates, and whether it contributes to technological progress. Assuming that countries A, B and C are
engaged in different production of a product, A country production after the first process exported to
country B, country B on the basis of the production of the second process and then exported to country
C, country C to complete the last processing and assembly process to form the final product,
respectively, exported to country A and country B for sale, then statistically, the country C in the
product exports may be inflated, but technology and value-added but mostly This is the disadvantage
of measuring industrial competitiveness under traditional trade statistics, while the statistical
calculation under the framework of value-added trade statistics can reduce the double counting of
intermediate products and be closer to the facts.
2.2 Indicator Measurement of China’s Manufacturing Participation in GVC
2.2.1 GVC Participation Measurement
GVC participation reflects the extent of a country’s participation in the GVC and consists of two
components: forward participation and backward participation, which are measured by the formula
shown in equation (1):
__
pt pt pt
GVC GVC f GVC b=+
(1)
Where
_
pt
GVC f
denotes the GVC forward engagement and
_
pt
GVC b
denotes the backward
engagement.
The GVC forward participation is measured as shown in equation (2)-equation (4):
_ _ _ _ _
pt pt pt
GVC f GVC f s GVC f c=+
(2)
_ /_
pt sgve
GVC f s VA SVA=
(3)
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
4
_ /_
pt cgve
GVC f c VA SVA=
(4)
Where
__
pt
GVC f s
represents the forward simple production length.
__
pt
GVC f c
represents
forward complex production length.
SVA
represents industry value added.
sgve
VA
represents the
value added of intermediate goods directly absorbed by the importing country.
cgve
VA
represents the
value added of intermediate products that are further exported through intermediate products
production in the importing country.
The GVC backward participation is measured as shown in equation (5)-equation (7):
_ _ _ _ _
pt pt pt
GVC b GVC b s GVC b c=+
(5)
_ _ /
pt sgvc
GVC b s FVA FG=
(6)
_ _ ( ) /
pt cgve cgve
GVC b c DVA FVA FG=+
(7)
Where
__
pt
GVC b s
represents the backward simple production length.
__
pt
GVC b c
represents
the backward complex production length.
FG
represents the total value of final products.
sgvc
FVA
represents foreign value added in domestic final product production.
cgve
FVA
represents foreign
value added included in final product production.
cgve
DVA
represents returned domestic value added.
2.2.2 GVC Location Index Measurement
The GVC location index is measured as shown in equation (8):
_
_
s
s
s
PL GVC
GVCPs PLy GVC
=
(8)
Where
s
GVCPs
is the GVC location index.
_s
PL GVC
and
_s
PLy GVC
are the average
production lengths of GVC based on forward and backward linkages, respectively. If the GVC
location index is greater than 1, it indicates that the industry is in a controlling position in the GVC,
and if the GVC location index is less than 1, it indicates that the industry is in a dominated position.
2.3 Measurement of China’s Manufacturing Global Value Chain Participation
Meanwhile, as mentioned earlier, in the field of international competitiveness research, the global
value chain theory has also evolved into a new index of comparative dominant advantage under trade
in value added, namely the NRCA index, which is calculated by the following formula:
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
5
_
_
_
_
i
i
Ni
iGi
r
GN i
r
rt
DVA f
NRCA
DVA f
DVA f
DVA f
=
(9)
The data for this part of the measurement was obtained from the UIBE database developed by a
university. Due to the data availability issue, the data from 2010 to 2023 are selected. The
measurement of the degree of GVC participation in China’s manufacturing industry is shown in
Figure 1.
From the figure, it can be seen that from 2010 to 2023, the forward participation of China’s
manufacturing industry has been maintaining an increasing trend, although it has fluctuated.
Comparatively speaking, the backward participation of China’s manufacturing industry has the same
increasing trend and remains stable after 2020. The above zones indicate that China’s manufacturing
sector as a whole is still more concentrated in the front-end production chain, in the lower value-
added production chain, and the related industries are still not well-developed. The process of China’s
manufacturing sector moving up the value chain has stalled, in contrast. According to the GVC status
index, China’s manufacturing industry’s position in the global value chain tends to be stable. The
GVC status index fluctuates in the range of [0.175,0.2], and the NRCA index is basically stable, with
fluctuations of the NRCA index not exceeding 0.1. China’s manufacturing industry’s international
competitiveness has remained unchanged for a long time.
Figure 1. The global value chain participation in manufacturing is measured
2.4 Country Analysis of International Competitiveness of China’s Manufacturing Industry
In analyzing the international competitiveness of the manufacturing industry, this section will
categorize different types of manufacturing industries to observe their different international
competitiveness under the value-added perspective and to find out the specific influencing factors
from them. The Chinese manufacturing subsectors are classified according to labor-intensive, capital-
intensive, and technology-intensive to observe their international competitiveness. Manufacturing
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
6
subsectors are categorized according to factor intensity, as shown in Table 1. Food, beverage, and
tobacco manufacturing. Textile, Garment and Leather Products. Timber, wood products, and cork
products, furniture manufacturing, and paper and paper products are all classified as labor-intensive
industries.
Table 1. The manufacturing sector is classified by factor intensity
Classification name
Industry name
Labor-intensive industries
Food, beverage and tobacco manufacturing
Textile, clothing, leather industry
Wood, wood products and cork industries
Furniture manufacturing
Paper and paper products
Capital-intensive industries
Printing and copying of media
Coke and oil refining
Chemical and chemical industries
Pharmaceutical and pharmaceutical preparation industries
Technology-intensive industries
Computer, electronics and optical product manufacturing
Power equipment manufacturing
Mechanical and equipment manufacturing without other classification
Transportation manufacturing
2.4.1 International competitiveness of labor-intensive industries
A comparison of the NRCA index for labor-intensive manufacturing based on export value added is
shown in Figure 2. China’s RCA index is far ahead, with the average value of the index hovering
between 2 and 3, showing the characteristic of extremely strong export competitiveness. China’s labor
advantage is gradually increasing after 2018.
Comparatively speaking, Japan’s labor-intensive manufacturing has no advantages to speak of. The
reason for this is that Japan is experiencing severe aging and there is virtually no demographic
dividend. The RCA index for labor-intensive industries in South Korea is now more stable.
Figure 2. Comparison of the NRCA index of labor-intensive manufacturing
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
7
2.4.2 International competitiveness of capital-intensive industries
A comparison of the NRCA index for capital-intensive industries based on export value added is
shown in Figure 3. The manufacturing trade competitiveness of China compared to the two developed
economies, Korea and Japan, is small. The index maintains the [1.2,1.3] range while being higher
than Korea and lower than Japan in general. China’s industrial structure being upgraded, the rapid
development of core industries that represent the modern industrial system, and the industry’s
international competitive position being similar to that of developed economies are reflected in this
pattern.
Figure 3. Comparison of the NRCA index of capital-intensive industries
2.4.3 International competitiveness of technology-intensive industries
Japan and the Republic of Korea, as developed countries in the technology-intensive manufacturing
industry, have remained highly competitive in trade, achieving NRCA indices of 1.5 to 1.8 in most
years. A comparison of NRCA indices of technology-intensive manufacturing based on export value
added is shown in Figure 4. In contrast, China’s NACR averages at a level of 1.1. The main reasons
for this pattern include that the overall innovation investment of Chinese SMEs is insufficient, the
technological reserve representing the international leading level is insufficient, and the upgrading
and product innovation and brand building top process of most of the exports are in the latecomer
industry in the international market. Therefore, China’s high-tech manufacturing industry, which has
been a part of the industry’s high-end materials, components, and equipment for a longer period, is
dependent on imports from abroad. Overseas imports of intermediate products are not only the price
of no bargaining expectations, but the stability of their supply is also difficult to guarantee. The
integrated circuit industry, represented by the import of key components of the overseas market
dependent on a high degree of external market fluctuations, is prone to technical “neck” problems.
Especially in the United States, due to the implementation of trade protection policies, restrictions on
the export of key technologies to China, and technology-intensive industries within the upstream
intermediate imports of high dependence.
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
8
Figure 4. Comparison of technology-intensive manufacturing NRCA index
2.5 Evaluation of Export Competitiveness of Various Industries in China’s Manufacturing
Industry
In accordance with ISIC
OECD
, C13-C15 Textile and Leather Products, Clothing, C16-C18 Wood,
Paper, Paper Products and Printing, C19 Coke and Petroleum Refinery Products, C20-C21 Chemical
and Pharmaceutical Products, C22 Rubber and Plastic Products, C23 Non-Metallic Mineral Products,
C24-C25 Basic Metals and Metal Products, C26-C27 Electro-Optical and Electronic Equipment
Manufacturing, C28 Machinery Manufacturing, C29-C30 Transportation Equipment Manufacturing.
Electronic Equipment Manufacturing, C28 Machinery Manufacturing, C29-C30 Transportation
Equipment Manufacturing.
According to
OECD TiVA−
the database, the export competitiveness of 10 Chinese manufacturing
industry segments is shown in Figure 5. The NRCA index was measured by the trade statistics method
of trade value added for the 10 Chinese manufacturing industry segments studied in this paper from
2013 to 2023.
The export competitiveness of 10 industries in China’s manufacturing sector demonstrates that the
trend of export competitiveness varies depending on specific values. Overall, the basic NRCA index
values of Textile and Leather Products, Garments, Nonmetallic Mineral Products and Electronic
Optical and Electronic Equipment are all greater than 2.6 for the period of 2013~2023, indicating that
these three industries have extremely strong export competitiveness.
Wood, Paper, Paper Products and Printing, Rubber and Plastic Products, Basic Metals and Metal
Products, and Machinery Manufacturing are all greater than 1.3 in the NRCA index value excluding
some years, indicating that these four industries have strong export competitiveness. The export
competitiveness advantage of two industries, chemical and pharmaceutical products manufacturing
and transportation equipment manufacturing, is weak. The industry of coke and petroleum refining
products shows an average advantage index value of less than 0.2 annually, proving that the industry
is generally at a disadvantage in the international market.
Specifically, the NRCA index value of the Textile and Leather Products and Clothing Industry is
greater than 3, the most competitively advantageous industry in China’s manufacturing sector during
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
9
2013~2023. In this industry, in 2013 ~ 2023 NRCA index overall showed a downward trend, and the
value of the decrease is larger, indicating that the industry, although the export competitive advantage
is strong, the strength of competitiveness is also gradually weakened. On the contrary, the non-
metallic mineral products manufacturing industry’s export competitiveness in 2013-2023 shows a
rising trend. The industry is more than 2.5 years old, its export competitiveness is very strong, and it
has been experiencing a steady and slow rise in competitiveness. The export competitiveness of the
electronic optical and electronic equipment manufacturing industry is showing a trend of first rising
and then falling, but the industry is basically also more than 2 per year, export competitiveness is also
stronger.
Timber, paper, paper products, and printing industry, rubber and plastic products, basic metals, and
metal products industry, and machinery manufacturing industry. Four industry NRCA index values
removed during part of the year are greater than 1.3, and all have strong export competitiveness.
Timber, paper, paper products and printing industry and rubber and plastic products industry export
competitiveness level of the overall trend of change is not big, are showing a downward trend, the
decline in the value of small. On the contrary, the export competitiveness of the basic metals and
metal products industry and machinery manufacturing industry is generally showing an upward trend.
Chemical and Pharmaceutical Products and Transportation Equipment Manufacturing Industry
Showing Advantage Index The NRCA index shows a trend of rising and then falling. The 10-year
export competitiveness index fluctuates around 1, and the overall fluctuation trend is small. Due to
fewer resources, China’s domestic imports of coal and petroleum refining products are increasing in
the industry of manufacturing in China. Therefore, the products exported less in China do not have
an export competitiveness advantage, resulting in a disadvantageous position in the trade.
Figure 5. China’s 10 segments of manufacturing industry export competitiveness
3 Measuring the evolution of China’s manufacturing position in global value chains
3.1 Framework for decomposition of trade value added based on international input-output
tables
The decomposition of trade flows in intermediate goods (WWZ method) is used to explain the idea
of decomposition of the total value of exports at the country and sector level.
Taking
,,S R T
three countries as an example,
A
is the matrix of direct consumption coefficients:
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
10
SS SR ST
RS RR RT
TS TR TT
A A A
A A A A
A A A
=
(10)
SR
A
denotes the share of inputs into country
S
‘s product required for each unit of product produced
in country
R
, which satisfies the relationship equation:
namely
SR
SR SR SR R
R
Z
A Z A X
X
==
(11)
The rowwise equilibrium relationship is then:
SS SR ST S SS SR ST S
RS RR RT R RS RR RT R
TS TR TT T TS TR TT T
A A A X F F F X
A A A X F F F X
A A A X F F F X
++
+ + + =
++
(12)
Shift the term to get:
1
S SS SR ST SS SR ST
R RS RR RT RS RR RT
T TS TR TT TS TR TT
SS SR ST SS SR ST
RS RR RT RS RR RT
TS TR TT TS TR TT
X I A A A F F F
X A I A A F F F
X A A I A F F F
B B B F F F
B B B F F F
B B B F F F
−
− − − + +
= − − − + +
− − − + +
++
= + +
++
(13)
Where
1
()B I A −
=−
is the inverse Lyonceph matrix, and element
sr
ij
b
of
SR
B
represents the
complete demand for the products of country
S
and country
i
for each additional unit of final
product in country
R
and industry
j
.
Expanding the right-hand side of the equilibrium relationship (13), using the example of exports from
country
S
to country
R
, yields:
R RS SS RS SR RS ST RR RS RR RR
RR RT RT TS RT TR RT TT
X B F B F B F B F B F
B F B F B F B F
= + + + +
+ + + +
(14)
The right-hand side of Equation (15) represents the pull of different final products on total output
R
X
in country
R
and is obtained by substituting
SR SR R
Z A X=
:
SR SR RS SS SR RS SR SR RS ST SR RR RS
SR RR RR SR RR RT SR RT TS SR RT TR SR RT TT
Z A B F A B F A B F A B F
A B F A B F A B F A B F A B F
= + + +
+ + + + +
(15)
Equation (15) means that the intermediate exports from country
S
to country
R
are absorbed by
different final products, which are decomposed into nine components depending on the place and
channel of absorption. Based on the decomposition of intermediate exports, a value added matrix is
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
11
introduced to completely decompose total exports into 16 components with different sources of value
added and final absorption places. The value added coefficient matrix
[]
S R T
V V V V=
is first
defined, where
,,
s R T
V V V
are all row vectors with 1 row and 56 columns, and the value added
coefficients
S
s
S
VA
VX
=
are defined.
The value added contained in the cited gross output due to an increase of 1 unit of final product in all
industries in the three countries constitutes the full value added coefficient matrix:
[]
[ , , ]
SS SR ST
S R T RS RR RT
TS TR TT
S SS R RS T TS S SR R RR T TR S ST R RT T TT
B B B
VB V V V B B B
B B B
V B V B V B V B V B V B V B V B V B
=
= + + + + + +
(16)
In the direction of the source of value, each unit of final product can be decomposed into the sum of
the value added of all countries and sectors, so that each element in the result of the matrix of value
added coefficients sums to 1, that is:
S SS R RS T TS
V B V B V B u+ + =
(17)
The total exports of country
S
can be expressed as:
S SR ST SR R ST T SR ST
E E E A X A X F F= + = + + +
(18)
SR
E
represents exports from country
S
to country
R
, which consists of both intermediate and
final exports, and is expressed as:
SR SR R SR
E A X F=+
. The economic implications of the other
formulas can be seen in the same way. Thus, the equation for the row balance relationship in the
international input-output table can be rewritten as follows:
00
00
00
SS S SS S S
RR R RR R R
TT T TT T T
A X F E X
A X F E X
A X F E X
+
+ + =
+
(19)
An input-output model for individual countries is obtained:
S SS SS SS S
R RR RR RR R
T TT TT TT T
X L F L E
X L F L E
X L F L E
+
=+
+
(20)
where
,,
SS RR TT
L L L
is the Leontief inverse matrix within a single country,
1
()
SS SS
L I A −
=−
, and the
other equations are similar.
Then intermediate exports from country
S
to country
R
can be expressed as:
SR SR R SR RR RR SR RR R
Z A X A L F A L E= = +
(21)
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
12
So exports from country
S
to country
R
can be decomposed as:
##
SR SR R SR SR R SR
E A X F u A X u F= + = +
••
(22)
where “#” is the corresponding element of the matrix multiplied.
3.2 Data sources and description
It is obtained by adding the foreign value added (FVA_INT) contained in the export of products, and
RDV indicates the domestic value added in the overall export of China’s manufacturing industry that
is folded back to China and absorbed by China. PDC indicates the double-counting term in the overall
export of China’s manufacturing industry, which is obtained by adding the pure double-counting
(DDC) in the country and the pure double-counting (FDC) in the foreign country. The formula is
expressed as:
F I I rex
DVA DVA IN DVA NT DVA NT= + +
(23)
FI
FVA FVA IN FVA NT=+
(24)
PDC DDC FDC=+
(25)
In the analysis of China’s manufacturing import trade value-added, EX_DVA represents the domestic
value-added of the rest of the world’s exports to China’s manufacturing industry, i.e. the foreign value-
added of China’s manufacturing industry as a whole in imports (EX_FVA_FIN) and the exporting
country’s exports of intermediates, i.e. the domestic value-added of intermediates in imports
(EX_FVA_INT) are added together. EX_RDV represents the domestic value added in the overall
manufacturing exports of the exporting country that is folded back and absorbed by the exporting
country, i.e., the foreign value added in the imports that is folded back to the exporting country and
ultimately absorbed by the exporting country. EX_PDC represents the double-counting term in the
overall manufacturing exports of the exporting country, i.e., the double-counting term in the overall
imports of the manufacturing industry of China, which is composed of pure double-counting in
foreign countries (EX_DDC) and pure double-counting in domestic countries (EX_DDC). And
domestic pure double-counting (EX_FDC) are added together. The formula is expressed as:
D D F D I D I rex
EX VA EX VA IN EX VA NT EX VA NT= + +
(26)
F F F F I
EX VA EX VA IN EX VA NT=+
(27)
P D F
EX DC EX DC EX DC=+
(28)
In the analysis of trade value added of manufacturing sub-sectors, “O_” denotes the value added of
primary product manufacturing. “L_” denotes the value added of labor-intensive manufacturing. “K_”
denotes the value added of capital-intensive manufacturing. “I_” denotes value added of knowledge-
intensive manufacturing.
3.3 Competitiveness Analysis of China’s Manufacturing Industry in the Global Value Chain
A new explicit comparative advantage index, the RCA_VA index, is proposed. The meaning of this
index is the ratio of the share of domestic value added in exports of an industry in a country to the
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
13
share of domestic value added in exports of that industry globally, and the formula for calculating the
RCA_VA index for industry i in country j is:
1
1 1 1
_
m
ij
ij j
ij m m n
ij ij
i j i
DV
DV
RCA VA
DV DV
=
= = =
=
(29)
where
ij
DV
represents the value added of domestic exports of industry
i
in country
j
.
1
m
ij
i
DV
=
represents the sum of the value added of domestic exports of all industries in country
j
.
1
m
ij
j
DV
=
represents the sum of the value added of domestic exports of industry i for all countries globally.
11
mn
ij
ji
DV
==
represents the sum of the value added of domestic exports of all industries in all countries
in the world.
The RCA_VA index expresses the international competitiveness of an industry or sector in a country
by means of value added in the global value chain. If the RCA_VA index is greater than 1, it means
that the industry or sector has a dominant comparative advantage, and the larger the value of the
RCA_VA index, the more competitive it is in the international market. If the RCA_VA index is less
than 1, it means that the country’s industry or sector does not have a significant comparative
advantage. The RCA_VA index’s lower value leads to a more competitive disadvantage in the
international market.
3.3.1 Overall RCA_VA index for China’s manufacturing sector
The overall RCA_VA index of China’s manufacturing industry is shown in Table 2. From the
viewpoint of the RCA_VA index of China’s manufacturing industry as a whole, RCA_VA>1 and
1.29 _ 1.44RCA VA
. It indicates that China’s manufacturing industry as a whole has a dominant
comparative advantage and has a certain degree of competitiveness in the international market. From
the trend of change, the range of change in the overall value is small.
Specifically, the lowest value of the overall RCA_VA index for China’s manufacturing industry
occurred in 2015, with a value of 1.297, and the highest value occurred in 2021, with a value of 1.441.
After entering the 21st century, with the gradual increase of China’s participation in the international
market and the gradual opening of the domestic market, China’s manufacturing industry has seized
the development opportunities and participated in internationalized production with its factor
endowment, gradually exported its products to many countries in the world by virtue of its low-cost
advantage, and actively adjusted its development strategy. The implementation of a differentiated
product production strategy for different product demands, occupying more and more market share
in the international market, has promoted the improvement of the international competitiveness of
China’s manufacturing industry and also made China’s manufacturing industry reach the most
competitive stage in 2021. However, after 2021, the international competitiveness of China’s
manufacturing industry showed a lack of growth, and its index fell to 1.398 by 2023, which is also
an inevitable result brought about by the continuous improvement of the costs of various input factors
in China’s manufacturing industry. Therefore, China’s manufacturing industry should actively
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
14
cultivate new development advantages under the circumstance of losing cost advantages gradually,
continue to seize international market share, and enhance the driving force for the improvement of
China’s manufacturing industry’s international competitiveness.
Table 2. China manufacturing industry overall RCA_VA index
YEAR
RCA_VA index
YEAR
RCA_VA index
2013
1.315
2019
1.353
2014
1.306
2020
1.368
2015
1.297
2021
1.441
2016
1.321
2022
1.415
2017
1.335
2023
1.398
2018
1.349
/
3.3.2 RCA_VA Index for Chinese Manufacturing Industries at Various Technology Levels
The RCA_VA indices of industries at each technology level are shown in Figure 6. From the RCA_VA
indices of industries at each technology level in China’s manufacturing industry, the RCA_VA indices
of low-technology level, medium-low-technology level, and high-technology level industries are
1.00 _ 2.00RCA VA
.
The RCA_VA index of medium- and high-technology industries was less than 1 in 2013, except for
the other years when it was
1.00 _ 1.30RCA VA
. This indicates that Chinese manufacturing
industries at all technology levels have substantial comparative advantages and are competitive in the
international labor market. The starting point of the RCA_VA index value for high-technology level
industries is lower when comparing industries of different technology levels. However, its growth
rate is faster, exceeding the medium and low-technology level industries and low-technology level
industries in 2014 and 2019, respectively. It has been the most internationally competitive technology
industry in China’s manufacturing industry in the period since then. The international competitiveness
of low-technology and high-technology industries is stronger than that of medium-low-technology
and medium-high-technology industries as a whole, and the difference between the RCA_VA indexes
of medium-low-technology and medium-high-technology industries has been narrowing over time.
The RCA_VA indexes of the two types of industries are basically the same after 2010, which also
indicates that the international competitiveness of these two types of technology-level industries is at
the same level.
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
15
Figure 6. The RCA_VA index of each technology level
4 Recommendations for countermeasures
4.1 Continued focus on high-tech industries
The previous analysis shows that the international competitiveness of labor-intensive industries in
China’s manufacturing industry maintains its advantages, while the international competitiveness of
technology-intensive industries remains at a relatively low level. To ensure optimal resource
allocation, it is necessary to adjust the overall trade value-added of the manufacturing industry to a
reasonable growth rate instead of unthinkingly pursuing scale growth. The development of high-tech
industries in the manufacturing sector should be given priority on this basis.
In terms of optimal allocation of resources, the focus should continue to be on high-tech industries.
Aiming at the direction of internationally advanced cutting-edge technological research, we will
continue to promote the mechanism of linking up industry, academia and research and master
internationally leading cutting-edge technologies to promote the development of the industry.
Continue to develop high-tech industries, strengthen the construction of scientific and technological
innovation capacity, and further improve the industrial innovation system. Provide advantageous
conditions for the development of high-tech industries, continue the research and development of new
products, and promote the transformation of scientific and technological achievements. Continue to
innovate knowledge. Coordinate the planning of institutions of higher learning and scientific research
institutions, screen advanced research directions for cutting-edge technologies, continue to promote
the industry-university-research linkage mechanism, master the leading international cutting-edge
technologies, and promote the development of the industry.
4.2 Accelerating the upgrading of the manufacturing industry and its subsectors’
technological level
According to the NRCA indexes of 10 subsectors of China’s manufacturing industry in recent years,
the export competitiveness of the electronic optical and electronic equipment manufacturing industry,
on the other hand, has shown a tendency to rise first and then fall later, and its export competitiveness
Yulei Zhang, Hui Li, Fan Zhang and Hang Zhang. Applied Mathematics and Nonlinear Sciences, 9(1) (2024) 1-18
16
is also stronger. However, industries such as coke and refined petroleum products are generally at a
disadvantage in the international market.
The key to upgrading the manufacturing industry is the upgrading of the technological level. Focus
on continuing to accelerate development from two perspectives: one is to accelerate the technical
level of the industry, and the other is to accelerate the level of talent.
To continue to accelerate the pace of constant innovation, strengthen technological innovation and
product innovation, and enhance the technical level of industry segments. Developed countries
formally, through the mastery of the industry’s advantageous technology, only to be able to
monopolize the industry to create the vast majority of the value. Therefore, China’s manufacturing
industry should continue to strengthen technological innovation and product innovation.
At the same time, we should strengthen and accelerate the talent training strategy to cultivate high-
end talents and leading talents. Increase the number and proportion of highly skilled personnel.
4.3 Implementation of the strategy for upgrading the industry’s position in the value chain
The strategy for upgrading the industry’s value chain position is a two-pronged drive, combining
technology-driven and consumption-driven efforts to enhance the industry’s value chain position.
Developed countries mostly master the core technology of their industries and invest their
advantageous resources in technology research and development so as to put their industries in the
upstream position of the global value chain through technology drive. China should also learn from
this way of integrating into internationalized production, transferring or outsourcing low value-added
work in industries where China’s manufacturing industry has already been able to master core
technologies, and focusing resources on core technologies and other work that has a very high
marginal benefit for enhancing the industry’s international competitiveness. Considering the
development strategy of the industry, it is important to consider the reasonable mobility of industry
employees, as China is the world’s largest country in terms of population. Therefore, it is necessary
to correctly guide the mobility of industry employees to other industries, such as the service industry,
so as to rationalize the allocation of advantageous resources.
5 Conclusion
This paper uses the formula of global value chain participation measurement to measure and get the
degree of participation of China’s manufacturing industry in the global value chain export and
subdivided into the international competitiveness of labor-intensive, capital-intensive, and
technology-intensive industries. Based on the trade value-added decomposition framework of the
table of international inputs and outputs, we analyze the evolution of China’s manufacturing
industry’s position in the global value chain.
From 2010 to 2023, it generally indicates that China’s manufacturing industry’s international
competitiveness has not significantly changed over the past decade. In terms of the GVC position
index, the position of China’s manufacturing industry in GVCs has leveled off. Forward participation
has been fluctuating, but it has been on a rising trend. The backward participation of China’s
manufacturing industry is still stable after 2020 due to the same increasing trend.
Breaking down the export competitiveness of China’s manufacturing industries, the potential for
improving the export competitiveness of China’s textile, leather products, and apparel industries
gradually decreases during the 2013-2023 period. During this period, the export competitiveness of
Export Competitiveness Enhancement Strategies for China’s Manufacturing Industry Based on Global Value
Chains
17
products from less competitive industries gradually improves, with a small increase but significant
development potential, such as chemical and pharmaceutical products and machinery manufacturing.
At the same time, the RCA_VA index of Chinese manufacturing industries at all technological levels
possesses significant comparative advantages and has a certain degree of competitiveness in the
international division of labor.
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