Accounting For Value Added Of China’s Export And Study On Comparative Advantage Of China’s Export

With the development of transportation and Communication Technology,there is a continuing trend of global production collaboration.Different stage of production are now performed in different countries,which make the cross-border intermediate input increasing rapidly.And the trade data is often subject to double counting due to the trade of intermediate products.The massive double counting magnified and torture the benefit obtained in the export trade and comparative advantage.Thus,traditional trade statistics can’t reflect the real of a country’s export.As the world’s top exporter,China still mainly take the low end parts of the global value chain,which make China’s domestic value added in export lower than developed country.Objectively,it requires us to use trade value-added depicting a country’s sector with its real gain and comparative advantage in the global value chain.Based on WIOD database from 1995 to 2011,and using the KWW decomposition framework proposed by Koopman(2014),we divide 41 countries and 35 sectors’ total export into nine value added terms.The results show that each term of China’s total exports increased from 1995 to 2011,the DVA,VAX and VS increase greatly.Contrary to the trend of total export,China’s DVA index and VAX index of China show the downward trend.Vertical specialization is consistent with the increase trend of China’s total export,it increases over time and its value always beyond 15%.What’s more,different sector’s VAX,VS and VS structure are different.Using the terms decomposed by KWW decomposition framework,we calculate RCA index and redefines it as VRCA.Meanwhile,we define the RCA index calculated by gross trade as TRCA.And then we compare the difference of VRCA and TRCA.The results show that there is a similarity between the TRCA based on export data and the VRCA based on the value added data.From 1995 to 2011,both TRCA and VRCA shows that low technology manufacturing industry has revealed comparative advantage and service sector has revealed comparative disadvantage.There are two main differences between TRCA and VRCA.The first one is TRCA always higher than VRCA,that means TRCA overestimate the revealed comparative advantage of the department who has comparative advantage,and underestimate the revealed comparative disadvantages of the department who has comparative disadvantage.Another one is a "twist" of comparative advantage is likely to happen when compare with the TRCA and VRCA.For example,the TRCA of electrical and optical equipment are greater than 1,but the VRCA value shows that the electrical and optical equipment become comparative advantages until 2001.Based on the conclusions of this paper,this article provides the corresponding policy recommendations for improving China’s value added export and modifying sector comparative advantage.