Research On The Upgrading Path Of China’s Global Value Chains

Contemporarily, an important trend of economic development is the integration of the world economy.As the continuous development of the world’s market economy and free trade, multinational corporations allocate resources globally in order to maximize profits. The production stages of a product including design, research and development, manufacturing and processing, distribution and after-sales service, happen not only in the same country or region but throughout the world, which is considered as "global production" phenomenon. The international division of labor no longer restricts between or within the industries, but gradually develops within the production process of a product, which breaks the boundaries of products and evolves into global value chains(GVCs).In the context of GVCs division, developed countries transferred the processing, assembly and other labor-intensive production processes to the developing countries which possessed abundant labor resources, and kept the higher value-added stages such as design, R&D and brand marketing at home to obtain maximum benefits. While undertaking the transferred industrial processes from developed countries, developing countries entered rapidly into the global production system, promoted the prosperity of international trade and the development of industries and enterprises. However, being locked in low value-added sectors for a long time will make the developing counties in the passive and following status, and get in "tragic growth". Under this circumstance, it is inevitable for Chinese enterprises to achieve technology progress and upgrade its GVC position.Recently, China’s outward foreign direct investment (OFDI) developed rapidly and became the third largest OFDI home country in the world. OFDI is an important path to obtain reverse technology spillover and thus achieve technology progress.The paper mainly studies how to promote China’s position in GVCs through OFDI means, discusses the meaning, types and governance of GVCs division, measures China’s current GVC status in terms of trade in value added, describes the development characteristics of China’s OFDI, analyzes the microscopic mechanism of how OFDI help GVC position upgrade, makes an empirical analysis of reverse technology spillover effects of emerging economies including China, and proposes strategy and tactics to breakthrough China’s low-end lock position in GVCs division.The thesis is divided into six chapters, and the main research questions are as follows:Chapter One is the introduction. The research is composed of five parts, including research background, theoretical and practical significance of the paper, literature review at home and abroad, main content and research framework, research methods, innovation and the insufficiency.Chapter Two is the theoretical analysis of GVCs and OFDI, which mainly studies (i) development, meaning and classification and governance patterns of GVCs. (ii) OFDI theories, including monopolistic advantage theory, product and factor market imperfection theory, international product life cycle theory, the theory of oligopolistic behavior, cross-investment theory, international theory, international production compromise theory and industrial organization theory, (iii) strategic asset-seeking OFDI and its reverse technology spillover theory.Chapter Three describes the mechanism of how OFDI promotes its home country’s GVCs position upgrading. It mainly studies (i) OFDI theoretical model of reverse technology spillover effect; (ii) direct and indirect mechanisms of OFDI reverse technology spillover effect; (iii) mechanism of how OFDI reverse technology spillover effect influences GVCs upgrading from the perspectives of producer-driven, buyer-driven and hybrid driven GVCs respectively; (iv) factors influencing China’s position in GVCs.Chapter Four studies the measurement of GVCs on the basis of trade in value-added. The content is:(i) connotation and significance of trade in value-added; (ii) decomposition and indicators of trade in value-added; (iii) common databases of trade in value-added; (iv) indicators of GVCs.Chapter Five analyzes China’s position of GVCs from the following perspectives: (i) significance of China’s GVC measurement; (ii) basis and method of China’s GVC measurement-using TiVA database constructed by WTO and OECD to estimate GVC participation and position index; (iii) overall status of China’s GVC position; (iv) China’s GVC positions by industries, especially the comparative analysis of the three industries and manufacturing industries of different technology level.Chapter Six is the empirical analysis of promotion of China’s GVC position affected by OFDI. The main contents include:(i) China’s OFDI status and characteristics; (ii) OFDI modes of Chinese enterprises to participate in GVCs; (iii) empirical analysis of Chinese OFDI reverse technology spillover effect-the study objects are E11 emerging economies including China and the conclusion is that there is positive effect between TFP and OFDI flows, which is influenced by domestic R&D capital, human capital quality and technology gap as well.Chapter Seven proposes the strategies and tactics of upgrading China’s GVC position from the perspectives of Chinese government, industries, OFDI and enterprises respectively.