China Industrial Economics, 2024, Issue 1

Authors: LYU Yue, ZHANG Haotian, GAO Kailin

Abstract: Global value chains (GVCs) have now embarked on a new phase of restructuringmarked by a pronounced shift towards localization, regionalization, and diversification. The strategicutilization of automation technology to facilitate business expansion, guaranteeing the security andresilience of industrial and supply chains, holds promise as a potent avenue for driving high-qualitydevelopment in China. Based on the Annual Survey of Industrial Firms and Customs Data from 2000 to2013 , this paper delves into the effects of importing industrial intelligent equipment on firms’ span ofstages in industrial chain and the mechanisms. 

The findings of this paper are as follows. First, imports of industrial intelligent equipmentsignificantly increase firms’ span of stages in industrial chain, indicating that application of intelligentequipment helps firms to expand their business along industrial chains. After addressing issues ofreverse causality and selection bias, and conducting robustness checks, our findings remain. Second.the mechanism analvsis reveals that since upstream production requires higher capital intensity whiledownstream production requires higher labor intensity, firms can create more comparative advantagesby importing intelligent equipment On the one hand, intelligent equipmentcanserve as a ''labosubstitute'', enabling firms to expand their business to the upstream by reducing costs in upstreamsegments.  On the other hand, intelligent equipment can “empower labor”, enabling firms to expandtheir business to the downstream by reducing costs in downstream segments. Third, from theperspective of industrial chain linkage, a firm's import of intelligent equipment exerts a ''spillovereffect" on its upstream and downstream partners. From the perspective of agglomeration, specializedagglomeration can amplify the effects on expanding firms' span of stages. From the perspective ofsupply chain risks, import of intelligent equipment aids firms in swiftly adapting their supply chains inthe face of supply chain disruptions.

Our study suggests that further expanding imports of industrial intelligentequipment caneffectively encourage firms to expand their business along industrial chains, offsetting the pressure ofrising costs for factors such as labor, and thereby enhancing modernization of industrial chains andsupply chains. Additionally, it is imperative to accelerate the process of intelligence adoption withinkey industries and leading firms , leveraging the amplifying effects of industrial chain linkage to triggerripple effects and thereby strengthen resilience and competitiveness of overall industrial chainsLastly, we should delve deeper into industrial agglomeration models, leveraging the ''labor pool" and "knowledge spillover" effects to forge automated, intelligent, and agile industrial clusters, This willfurther bolster the effects of intelligent equipment and invigorate the extension and enhancement ofindustrial chains.

Key words: import of industrial intelligent equipment; span of stages in industrial chain; industrial chain resilience; artificial intelligence