New Trends of Global Value Chains and China`s Innovation Capacity

Abstract

A new phenomenon of the global trade is that its growth has been lower than the global GDP growth. Before 2005, global trade has been growing much faster than the output, and used to be twice as fast, however, since 2000, the gap between the global trade growth and GDP growth began to narrow, and from 2005, the GDP growth surpassed the trade growth except the brief period following the 2008 financial crisis. A striking fact that accompanies this change is the rapid emergence of new intelligence technologies and trans-border data flow. Many international companies are adopting new technologies such as 3D to manufacture parts and components. This poses new and more urgent challenges to China`s innovation and industrial upgrading agenda. Currently China is highly integrated into the global value chain, and has become the biggest manufacturing country in terms of global value added. However, when examining the contributions of services, manufacturing and primary exports to the global value chain (GVC) participation, the contribution of Chinese services (especially R&D, design, and business services, etc.) to the manufacturing exports is still low compared with Korea, Japan and other emerging economies. This shows that China`s increasing inputs in R&D and technology innovation has not yielded the commensurate outputs and the export competitiveness is still mainly coming from the manufacturing and processing activities. This situation calls for further improvements in its innovation ecosystem.