The Journal of World Economy, 2019, Issue 5

Authors: Luo Wei and Lyu Yue

Abstract: This paper constiucts a new type of world input-output table that reflects theinput-output flow firom foreign investment, estimates the contribution of foreign enterprises to theadded value of trade and assesses the scale and structure of the foreign capital value contributionto China's exporting section level, bilateral level and bilateral-section level. Research resultsreveal that foreign enterprises strengthen the depth and complexity of China's integration into theglobal value chain through their natural connections with the network of transnationacorporations within the global value chain. It is also noted that the high processing trade tendencyfacilitates downward migration from China's manufacturing industries to the global value chainFrom the perspective of temporary trends, the contribution of foreign firms to the trade scale ofvalue-added tends to decline, something that is related to the FDI structure, which is clearlymisaligned with the new stage of China's economic development. Thus, increased active use offoreign capital requires not only opening up new investment growth points in advancedmanufacturing and moder services, but also focusing on creating a favourable environment forthe transfer of high-end value chains.

Key words: value-added trade, global value chain, foreign direct investment (FDI) , world input-output table