The Decomposition Of Gross Trade Flows Between China And Usa As An Example Of Tracing Value-added In Gross Expors Under The Global Value Chain Perspective

As different stages of production are now regularly performed in different countries,intermediate inputs cross borders multiple times. As a result, traditional trade statistics becomincreasingly less reliable as a gauge of the value contributed by any particular country.The paper aims to develop the first disaggregated accounting framework that decomposes gross trade, at the sector, bilateral, and bilateral sector levels, into the sum of various value added and double counted items.Importantly, In order to do the decomposition at such disaggregated level, We overcome major technical challenges of how to decompose bilateral gross intermediate trade flows based on their final destination of absorption. This goes beyond the initial Leontief insight that has been applied in the existing literature on the decomposition of final demand and GDP by industry. This paper generalizes the gross exports accounting framework at the country level, recently proposed by Koopman, Wang, and Wei(2014), to one that decomposes gross trade flows(for both exports and imports) at the sector, bilateral, or bilateral sector level. Our new framework decomposes gross trade flows at any level of disaggregation into four major parts:(a) domestic value added that is absorbed abroad,(b) domestic value added that is initially exported but eventually returned home,(c) foreign value added, and(d) pure double counting terms. The framework in fact allows one to further decompose each of the four major parts above into finer components with economic interpretations. It goes beyond extracting value added exports from gross exports, and recovers additional useful information about the structure of international production sharing at a disaggregated level. We present the dis-aggregated decomposition results for bilateral sector level gross trad e flows between China and USA in 35 sectors from 1995 to 2011 based on the WIOD database.And we calculate the GVC_Participation and the GVC_Position of China and America for bilateral sector level in 1995 and in 2011.At last, we proposes the strategies of how to participate in GVC improve the trade status of China.