Export heterogeneity and China’s domestic value added

Giving consideration to the heterogeneity of Chinese exports, this study employs a direct approach to estimate the domestic value added of Chinese processing exports, total exports and bilateral exports. Compared with the popular input-output tables approach, the method adopted in this study requires less data and much less assumptions. The estimates show that the share of the domestic value added in processing exports was 37.1% in 2018 while that of ordinary exports was as high as 72.4%. From 2004 to 2018, the domestic value added of Chinese exports rose from 54.5% to 63.7%. However, the large disparity in the domestic value added between processing and ordinary exports remained. The domestic value added of Chinese exports also varied significantly across the trading partners. In 2018, it ranged from 52.9% to 75.3%. Generally, Chinese exports to developing countries were embedded with higher domestic value added than those to developed countries.