Weighing China’s export basket: The domestic content and technology intensity of Chinese exports

In this paper we use new, detailed, and comprehensive linked firm-transaction data to measure the domestic content and technology intensity of Chinese exports over the period 2000–2007. We evaluate the extent of value-added in China’s exports, using a modification of a method proposed by Hummels et al. (2001) which takes into account the prevalence of processing firms. In addition, we provide new estimates of the skill-and technology-intensity of China’s exports. Our estimates of value-added suggest that the domestic content of China’s exports increased from only 53% to about 60% over the period 2003–2006. Our cross-firm analysis reveals that processing exporters have value-added shares approximately 50% lower than non-processing exporters, even after accounting for ownership, location, and industry. We also show that Chinese exports have become increasingly sophisticated, largely driven by skill and technology improvement within industries.