Does regional value chain participation affect global value chain positions? Evidence from China

Does participation in the ASEAN-China regional value chain (RVC) affect China’s manufacturing enterprises’ global value chain (GVC) positions in the context of the establishment of the ASEAN-China Free Trade Area (ACFTA)? In this paper, we discuss the theoretical mechanisms and impacts of RVC participation on GVC positions and use an input-output model to decompose the gross exports of China by different sources and destinations. The model measures China’s manufacturing industries’ total, upstream and downstream participation within the ASEAN-China regional value chain. Using panel data from the OECD for 2005 to 2015, the empirical results show that (1) the participation of China’s manufacturing industries in the RVC is conducive to improvement in their GVC positions, (2) moving to more upstream can indeed promote the GVC positions of enterprises, and (3) in contrast to labour-intensive and capital-intensive manufacturing, knowledge-intensive manufacturing in upstream activities of the RVC contributes the most to GVC positions. It is suggested that China should develop knowledge-oriented industries and move to more upstream of the ASEAN-China RVC to raise manufacturing industries’ positions in the GVC.