"The Belt And Road" And Chinese Industrial Upgrading Path

" The Belt and Road"(abbreviated B&R)Initiative is a development strategy that focuses on connectivity and cooperation among countries primarily between the China and the rest of Eurasia.Based on the perspective of Global Value Chains(GVC),this paper studies the relationship of B&R strategy and Chinese industrial upgrading path.From GVC perspective,industrial upgrading is equal to moving upstream in value chain.China would shift from the passive participant role to the dominant role in GVC if China can cooperate with B&R countries to build a new global value chain which China can play a leadership role in,and then China can successfully follow the change of comparative advantage to move upstream along the value chain.This paper examines the possibility of China cooperating with B&R countries to build a global value chain which China play a leadership role in.Using the input-output method,this paper decomposes a country’s total exports into value-added components by source.Based on the method of Koopman el al(2010),this paper estimates GVC_Participation index and GVC_Position index of China and B&R countries.Furthermore,this paper also re-compute the Revealed Comparative Advantage(RCA)index of these countries by using domestic value-added data.By using Chinese industry level’s panel data,this paper also studies factors that influence the GVC position of China.The main conclusions of this paper are as follows:1.Chinese GVC_Participation index has been significantly increased.Chinese GVC_Position index has also been a certain increase,but in general it still lower,and it does not match Chinese GVC participation.Some industries’ GVC position of China have always been lower than main economies of the world during many years.2.Chinese comparative advantage has undergone a dynamic change,and the comparative advantage has gradually shifted from labor-intensive industries to capital-intensive and knowledge-intensive industries.3.Empirical results show that the increase of Chinese GVC participation does promote the rise of Chinese GVC position.In addition,if a industry has higher RCA index,its GVC position would higher too.4.Although Chinese GVC_Position index is lower than main economies,Chinese GVC_Position index is significantly higher than B&R countries.China has a comparative advantage in capital-intensive and knowledge-intensive sectors and most of B&R countries have comparative advantage in labor-intensive sectors.Therefore,China can plays a leadership role in the new global value chain.