Global value chains and trade elasticities

- We investigate whether global value chains have increased the elasticity of trade to foreign income shocks.
- This may occur through a composition and a supply chain effect.
- We use Chinese trade data across industries and customs regimes.
- We find evidence of a composition effect.
- We find no evidence of a supply chain effect.

We investigate whether global value chains have increased the sensitivity of Chinese trade to foreign income shocks. This may occur through either composition or supply chain effects. We find evidence for the former, but not the latter.