Service trade liberalization and manufacturing value chain upgrading: a quasi-natural experiment from China

This study leverages China’s pilot policy for the innovative development of trade in services as a quasi-experimental setting to examine its causal effect on upgrading within manufacturing value chains. Based on a sample of A-share listed manufacturing firms from 2013 to 2023 and employing a double machine learning (DML) model for robust causal inference, we document that the pilot policy significantly promotes firm-level value chain upgrading. This effect is particularly pronounced among firms located in the eastern region, nonstate-owned enterprises, and technology-intensive manufacturing industries. Mechanism analyses reveal that the policy operates primarily through three channels: promoting industrial structure upgrading, elevating the quality of intermediate inputs, and optimizing the endowment of high-end production factors. These findings offer robust empirical support for the role of institutional innovation in enhancing manufacturing competitiveness and provide targeted insights for policy design aimed at facilitating industrial transformation and high-quality development.