Research On The Mechanisms Of Trade Policy Uncertainty On Manufacturing Industry’s Embedding In Global Value Chains

The current international situation is unstable,and coupled with the spread of the COVID-19 pandemic,global protectionism is on the rise,further increasing the overall instability of the world situation.On the contrary,China has already started industrial upgrading and is committed to promoting high-quality economic development.At the just-concluded 20 th Party Congress,the importance of developing high-end,intelligent,and green manufacturing was once again emphasized.In areas related to national security and development,we are accelerating efforts to address weaknesses and enhance strategic resource supply security.Research on the impact of trade policy uncertainty on China’s integration into the global value chain is of great significance for consolidating China’s leading position in manufacturing.Therefore,it is crucial to clarify how China can enhance its international competitive advantage in the manufacturing sector amidst the current international situation of increasing trade policy uncertainty.This article first reviews the theories and literature related to trade policy uncertainty and global value chains,providing theoretical support for analyzing how trade policy uncertainty affects the integration of manufacturing industry into the global value chain.Then,using relevant data from the WTO and WITS databases,this article calculates the index of trade policy uncertainty,and simultaneously measures the index of a country’s participation in manufacturing global value chain trade activities using data from the UIBE GVC Index database.The study found that from 1996 to 2019,the level of trade policy uncertainty in major manufacturing countries showed a generally fluctuating downward trend,followed by a sharp increase in 2019.However,it can also be seen that China’s level was much higher than the average level of major manufacturing countries before joining the World Trade Organization(WTO),and it has significantly decreased after joining the WTO.But currently,it is consistent with the main trend of major manufacturing countries and has shown an upward trend in recent years due to the turbulence of the world situation.The participation index of China’s manufacturing industry in the global value chain,except for a rapid increase after 2002,has followed a similar trend of ups and downs as the average of major manufacturing countries.Then,this paper conducts in-depth research on the impact mechanism of trade policy uncertainty on the embedding of manufacturing industry in the global value chain from the perspective of the inhibitory effects of technology research and development and FDI inflows,and puts forward five hypotheses.Then,the hypotheses were empirically tested through model estimation,using panel data from20 major manufacturing countries from 1996 to 2018.Based on the mechanisms of the impact,the study found that an increase in trade policy uncertainty can significantly inhibit the integration of manufacturing into the global value chain.The study also verified the underlying mechanisms by which trade policy uncertainty affects the integration of manufacturing into the global value chain.First,standard regression was conducted on the trade policy uncertainty index and the index of manufacturing’s integration into the global value chain.To verify the mediating effects of FDI inflows and technological research and development efficiency,standard regression was also conducted on the two mediating variables.To investigate the mediating effects,the trade policy uncertainty and two mediating effects were separately regressed on the index of manufacturing’s integration into the global value chain.To ensure the reliability of the results,the study conducted robustness tests,including lagging one period,replacement regression models,and replacement of core explanatory variables.The results were consistent and passed robustness checks,demonstrating the validity of the five hypotheses proposed in this study.Finally,based on the above conclusions and the specific situation in China,this paper proposes the following policy recommendations for the development of China’s manufacturing industry:(1)continue to adhere to the basic principles of openness,cooperation,and win-win,actively respond to the uncertainty of trade policies,and promote the construction of an open world economy;(2)strive to create a stable trade environment,comprehensively use various policies and measures,and promote China’s participation in global value trade activities;(3)create a favorable business and investment environment to attract more foreign investment;(4)actively promote and support technological research and development in the industry,cultivate technical talents in the manufacturing industry,and accelerate the process of technological research and development.The above conclusions and suggestions in this article have enriched the research on the impact mechanism of policy uncertainty on the manufacturing industry’s integration into the global value chain to a certain extent,deepened the research level,and have some innovative significance.Specifically,the theoretical contributions of this article are as follows:(1)Enriched the analysis of the impact of trade policy uncertainty on global value chain.Previous research on the impact of trade policy uncertainty mainly focused on the direct impact on export trade,while this study divided the impact by industry and explored in depth the mechanism of its impact on the global value chain of manufacturing.(2)Opened up the intermediate mechanism of the impact of trade policy uncertainty on the manufacturing industry’s integration into the global value chain.This study found that previous literature on the impact of trade policy uncertainty on global value chain activities in manufacturing mainly focused on direct impact mechanisms.Against this background,this study introduced two mediating variables: FDI inflows and technology innovation,and explored the intermediate mechanism of trade policy uncertainty’s impact on the manufacturing industry’s integration into the global value chain.