import uses and in what can we learn from chinese micro

Import Uses and Domestic Value Added in Chinese Exports:What can we learn from Chinese micro data?

Shunli Yao, Hong Ma, Jiansuo PeiUIBE Tsinghua UIBE

October 2013

Motivation• WTO/OECD launched “Made in the World” initiative in 2011• http://www.oecd.org/industry/ind/measuringtradeinvalue‐

addedanoecd‐wtojointinitiative.htm

Motivation• Estimate DVA in exports

an important topicbut lack of data

• Ahmad et al. (2011) pointed out that “the key challenges in the immediate future concern the quality of trade statistics and the assumptions made to allocate imports to users”

• OECD’s exercise with Turkish micro data is an attempt to reveal the patterns of firm heterogeneity in trade and production and based on that, to improve trade in value added measures (Ahmad and Araujo, 2011).

Literature• Input‐output tables are the appropriate tools to meet the needs

(compared with product‐level analysis, e.g. the iPhone value chain, and trade‐data based analysis)

• Preferably international input‐output tables (e.g., GTAP, WIOD, EORA, and OECD)

• Problems: China’s trade structure does not properly represented biased estimates for China vis‐à‐vis its trade partners

• Solution: develop China’s DPN (or DP) framework

pioneered by Chen et al. (2001) followed by Lau et al. (2007), Dean et al. (2011), Chen et al. (2012), Koopman et al. (2012)

Literature (cont.)

• Key is to spilt‐up the import use from intermediate deliveries• Proportionality assumptions and firm survey• Problems:

Over‐simplified, Feenstra & Jensen (2012) biased estimates, Bernard et al (2007).

• Solution: explore existing firm level data

better surveyto narrow the scope of assumptions

Import uses in China 2007 IO

• Competitive IO tables

42/135 sectors, public release

• Competitive & Non-competitive IO tables

42/135 sectors, internal use

• DPN frameworkw/ processing & normal exp, domestic prod

42 sectors, internal use

Intermediate use Final use D P N DFD EXP TOT

D DDZ DPZ DNZ Df 0 Dx

P 0 0 0 0 Pe Px

N NDZ NPZ NNZ Nf Ne Nx

IMP DM PM NM Mf 0 Mx

VA )( ′Dv )( ′Pv )( ′Nv

TOT )( ′Dx )( ′Px )( ′Nx

A sketch of the DPN framework

Source: Lau et al. (2007), Chen et al. (2012)

Import use in China 2007 IO

• How to determine the shares of import use by sector?

• Semi-survey by NBS, first time in Chinese IO tables

10,000 large firms, sampled from enterprise dataset

Yangtze Delta 3500, Guangdong 1300(Shanghai 1100, Zhejiang 1100, Jiangsu 1300)

Focus given to FIEs

Import use in China 2007 IO

• No use of firm level trade data

No prior knowledge of trade patterns

• Biased in regional and size distribution

small firms behave differently from large ones

roughly 1/3 in Yangtze1/3 in Guangdong1/3 in Northern China (w/ Japan & Korea)

Customs survey

• Targets trading companies• Selection of companies and goods

Based on 2010 import volume.• For non‐processing imports

top 60% percentile, with imported goods 1,734 traders and 343 8‐digit HS goods

• For processing imports, roughly 10,000 firms and 300 8‐digit HS goods

• No use of firm level production data• No prior knowledge of production patterns

The Customs Imports Uses Survey Questionnaire Commodity code: XXXX.XXXX Imports (thousand USD): XXXX Proportion: XX.X%

Primary classification

Secondary classification (Input-output sector) Amount Ratio (%)

Note

Intermediate use

01 Agriculture, forestry, animal husbandry and fishery

02 Coal mining and washing industry 03 Oil and gas exploration industry … … … … … … … … … … … … … … … … 65 Public administration and social

organizations

Final use Final consumption expenditure Capital formation

Aggr. estimates

China micro data: available, but usable? (1/2)

More problems:• Imports resold to other firms• Imported inputs not used in current year (inventory)• Firm produces in multiple sectors

But, never mind, make assumption and use it!

Upward, Richard, Zheng Wang and Jinghai Zheng, 2012, “Weighing China’s export basket: The domestic content and technology intensity of Chinese exports,” Journal of Comparative Economics

China micro data: available, but usable? (2/2)

Only a subset of exporting firm

Firm heterogeneity calls for more effort in survey design

Firm heterogeneity are more pronounced at industry level (exp share distribution)

Firm heterogeneity are more pronounced at industry level (int. import /tot output)

Firm heterogeneity are more pronounced at industry level (int. import / tot input)

import uses and in what can we learn from chinese micro

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