Domestic value added and employment generated by Chinese exports: A quantitative estimation

We develop an input-output methodology to estimate how Chinese exports affected the country's total domestic value added (DVA) and employment in the years 2002 and 2007. For every US$1000 dollar of Chinese exports in 2007 (2002), DVA and employment are estimated to be US$591 (US$466) and 0.096 (0.242) person-year, respectively. To implement these estimations, we use hitherto unpublished Chinese government data to construct several completely new datasets, including an input-output table with separate input-output and employment-output coefficients for processing exports, non-processing exports, and output for domestic use. We hypothesize that, in comparison with the export sector, China's domestic sector would be relatively autarkic due to China's history of central planning. We expect that exports would generate less DVA and employment than output for domestic use. Processing exports, which are highly dependent on imported inputs, would similarly generate less DVA and employment than non-processing exports. Our findings support these expectations. For both 2002 and 2007, the DVA and employment effects of domestic final demand were higher than those of non-processing exports, which were in turn higher than those of processing exports. However, with the progress of economic reforms, we found that the total DVAs of exports and domestic final demand have converged from 2002 to 2007.

► We use unpublished Chinese data to compile 2002 and 2007 input-output (I-O) tables. ► We estimate separate I-O coefficients for processing and non-processing exports. ► We estimate the value added (VA) and employment generated by Chinese exports. ► The VA and employment generated by domestic final demand were higher than exports. ► The value added of exports and domestic final demand have converged over time.