Input tariff liberalisation and servitisation in manufacturing: Evidence from China's WTO accession

Abstract

This paper links the sharp drop in China's manufacturing servitisation (MS) in early 21st century to China's accession to WTO featured by conspicuous input trade liberalisation (ITL). The results show that manufacturing industries exposed to higher degree of ITL suffer more MS declines after China's accession to the WTO. Heterogeneous analysis shows that industries with high import intensity, capital intensity or technology intensity suffer more MS declines following input trade liberalisation. Further analysis shows that input trade liberalisation increases the import of intermediate inputs while significantly reduces the proportion of service imports for manufacturing industries. The results are robust to a series of robustness checks.

Empirical Research on The Impact of China’s Overseas Economic and Trade Cooperation Zones on the Development of Host Countries in the Global Value Chain

“…The estimated coefficient of the interaction term is significantly positive, indicating that the construction of COCZs has a greater impact on promoting the GVC positions of countries that have higher level of innovation. Furthermore, it is consistent with previous studies which have proved that innovation is one of the most effective ways to promote the enhancement of GVC positions [28,29].…”

“…Comparatively, only relying on the number of labor force is not conducive to the rise of GVC positions [27]. From the perspective of innovation capability, the existing research generally believes that the improvement of technology and the total factor productivity are the effective ways to promote the enhancement of GVC positions [28,29]. The innovation of intermediate products in manufacturing industries has a significant promotion effect on the value-added rate of exports, especially on the value-added rate of high-tech manufacturing industries [30].…”