Why Chinese exports are becoming more sophisticated -- not just because of outsourcing

Well, it's not just because of outsourcing from big companies, at least according to this research paper by a couple of economists.

What Accounts for the Rising Sophistication of China's Exports?

> by Zhi Wang, Shang-Jin Wei - #13771 (ITI)

>

> Abstract:

>

> Chinese exports have become increasingly sophisticated. This has

> generated anxiety in developed countries as competitive pressure may

> increasingly be felt outside labor-intensive industries. Using

> product-level data on exports from different cities within China, this

> paper investigates the contributing factors to China's rising export

> sophistication. Somewhat surprisingly, neither processing trade nor

> foreign invested firms are found to play an important role in

> generating the increased overlap between ChinaĆ¢?Ts export structure

> and that of high-income countries. Instead, improvement in human

> capital and government policies in the form of tax-favored high-tech

> zones appear to be the key to the country's evolving export structure.

> On the other hand, processing trade, foreign invested firms, and

> government-sponsored high-tech zones all have contributed

> significantly to raising the unit values of Chinese exports within a

> given product category.

>

> http://papers.nber.org/papers/W13771

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