Focus topics

At the expensive end of the value chain

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  • China’s overall participation rate in global value chain has significantly increased from 29.5% in 1990 to 44.6% in 2018, according to Sinolytics’ calculation based on the UNCTAD Eora GVC database.​
  • The detailed look at imports and exports of immediate goods tells two distinct stories:​
    • China is consistently enhancing its value add in exports of immediate goods, which is thereafter exported to third countries.​
    • In contrast, its reliance on imports of foreign immediate goods peaked around 2008 and then reduced gradually.​
  • One explanation for the reduction of import reliance is the growing maturity of China’s industrial sectors: Now stretching across vertical value chains, China’s industries have steadily decreased the demand for imported foreign parts or raw materials.​
  • This evolution also matches closely with the intentions of China’s top leadership for China’s position in international trade. Xi expressed prominently in 2020: “(we) shall improve the reliance of global value chain over China and provide strong capacity of deterrence and countermeasures towards potential cutoff of foreign supply”​
  • This also clarifies a common misunderstanding regarding the “dual circulation” concept: The goal of “dual circulation” is not to shrink the size of international trade, not to reduce the level of Chinese integration, but to make it more favorable towards China. ​
  • China intends to exert more influence over the global supply chain by providing more value add in its export while reducing the risks of “foreign influence” over its imports. ​

Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and concrete business activities in China.


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