"Conjoint Circulation" Of Value Chains

Since the start of the reform and opening up period,China has embedded in the value chain dominated by developed countries,and participated in international division of labor by taking advantage of traditional factors such as labors and resource endowment.With the development of China’s opening and the gradual strengthening of China’s strength,China’s role and position in world is no longer as simple as the “World Factory”.China has become an important hub of the international production network,linking the value chain of developed countries with that of developing countries.Accordingly,the pattern of international division of labor has gradually changed,it is no longer a simple peripheral-core division of labor.At this stage,the international division of labor presents a “Conjugate Circulation” pattern.Although the evolution of the production fragmentation and the role of China have always been the focus of academic attention,the existing research still lacks quantitative analysis of the new structure of international production network and the role of China.This paper mainly addresses the following issues: the re-positioning of the structure of international production network and the evolution and upgrading mechanism of China’s role in this network.In order to solve the above problems,this paper first constructs an intra-product division model to show the formation of international production network consisted of developed countries,emerging market economies and developing countries,and process distribution mechanism of production fragmentation in the form of value circulation,emphasizing the pivotal position of emerging market economies in the production network and the upgrading mechanism of value chains.Then,we use the social network analysis method to describe the structure of international production network and use macro and micro data to validate the reasoning of the model,put forward the "conjugate circulation theory" of China’s open economy,and explore the feasible path for China to upgrade its international hub status and climb to the middle and high end of the value chain under the dual value chain division pattern.The main conclusions drawn in this paper are as follows:Firstly,at present,with the further development of China’s opening,China has become an important hub country in the world economy and the international production network shows a “conjugated circulation” pattern,i.e.China is in a pivotal position in the value chains of both developed and developing countries.Through the analysis of China’s path to becoming an important hub country,it is found that after the start of the reform and opening up period,China continued to integrate into existing global value chains established by developed countries,while it established trade relations with other developing countries on the margins of the international production network,gradually occupying the "structural hole" in network,thus enhancing the centrality in the international production network and the influence of the value chain.Although the development of China’s open economy has made great achievements,China still face development predicaments of being “big but not strong” and the predicament that key core technologies are constrained by others.These have hampered China’s pace of rising to the high end of value chains.Secondly,by analyzing the determinant mechanism of the centrality in the international production network,it is found that: on the whole,factors such as market advantage,institutional quality,technical support and population structure of a country have greater impact on its centrality than traditional advantage factors such as openness.And there are some differences between national heterogeneity and trade network heterogeneity.Further,through the analysis of the evolution of importance of advantage factors,it is found that the importance of institutional quality,technological environment,home market(population,urbanization level)and population structure has gradually increased.It is essential for China to build a new comprehensive advantage.Based on the above analysis,we analyze why China has become an important hub of the international production network from the aspects of national opening policy,institutional quality,technical support,labor dividend and home market since the start of the reform and opening up period.Thirdly,by analyzing the path of upgrading in the global value chain,we find that,(1)the promotion of a country’s centrality in the international production network is conductive to the promotion of its position in the global value chain.After 40 years of rapid development since the reform and opening up,China has become a "conjugate circulation" hub,which is conducive to enhancing China’s position in the global value chain.(2)There are differences in the path and space for Chinese enterprises to ascend in the position between the value chains of developed countries and that of developing countries.China is embedded in the value chains led by developed countries,and can undertake more complex process production and enhance China’s position in value chain by obtaining technology spillover effect,but there is a convergence trend in the climbing space.In the value chains of developing countries,the upgrading of developing countries is conducive to promoting China’s further upgrading in global value chain and achieving the climb to the middle and high end.The policy enlightenment of this paper is as follows: Firstly,efforts should be made to consolidate China’s pivotal position in the "conjugate circulation",continue to maintain the advantages of policies and industrial chains,build a global value chain dominated by ourselves,realize "two-wheel drive" through the benign interaction between the two circulation,further release economic potential and enhance our position in the global value chain.Second,we should solve the problems encountered in opening up with higher level of openness.We must unswerving expand the opening,support the multilateral trading system,actively advocate and promote value chain friendly international rules,and promote the construction of an open world economy.Thirdly,"Advance reform,strengthen areas of weakness and rely on market",let the market play a decisive role in the allocation of resources and the government play a better role;Repair the shortcomings of core technology in the “time waits for no one” spirit;Expand the domestic market demand,improve the quality of supply system,and significantly enhance the economic quality advantage of our country.