Thread by @Trinhnomics

There's a paper & by that I mean 197 pages of it on the Global Value Chain written by the World Bank (used to work there on FDI) in collaboration w/ the WTO, JETRO, Chinese academics etc. Rest assure a lot of resources are devoted to it. Have a read👇🏻

documents.worldbank.org/curated/en/384…

When u read a major work like this, ask the following:

a) Who funded this paper? B/c the funder tells u what the message will tell;
b) What is the agenda?

People forget that non-profit business is dependent on the resources & always have an agenda. Everyone has an agenda.

Continuing w/ this theme of considering the writer for the message. Here is the final chapter of this book, which is about the domestic value chain. Key pts:

a) Domestic value added (DVL) fall everywhere, developed & EM. But don't fear this, actually good (🙄!
b) China DVL up🤗

The author (Jiansuo Pei) argues that China is a counter example to his thesis & that China will be like everyone soon.

So we must ask the following, if everyone DVL is down but China DVL is up, then it must means China is GAINING GLOBAL MARKET SHARE while hard to GAIN IN CHINA'S

Exports global market share since 1948 (% of total):

1948: 🇺🇸 22%, 🇨🇳 1%
1975: 🇺🇸 12%, 🇨🇳 1%
1997: 🇺🇸 12%, 🇨🇳 3%
2001: 🇺🇸 12%, 🇨🇳 4%
2015: 🇺🇸 9%, 🇨🇳 14%
2018: 🇺🇸 9%, 🇨🇳 13%

#China #USA

FDI restrictiveness index for manufacturing, telecom & financial services (same author) on why China's domestic value added for exports has INCREASED while everyone else has fallen (Source of index is OECD). Who's most restricted? Hint (🤔color for China isn't red but light blue)

Should high domestic value added in exports be an objective of policy?🤔

In Made in China 2025, motivated from the German version of 2020 & it's Germany that coined Industry 4.0, specific targets were set: aims to achieve 70% self-sufficiency in high-tech industries & by 2049..

Made in China 2025 says that by 2049 becomes a dominant position in global markets...

This author has this amazing U-shaped idea that value added DECLINES AS GDP RISES but u can equally says that it goes up (look at my editing);

Btw, China GDP per capita rose as its DVA rose🤗

Paper is on page 141 of this great product, which I highly recommend everyone to read. And yes, I'm here to translate academic papers/concepts into trade-able ideas 😉

Let me show u in charts & by that I mean not my charts but the authors work as I like to give credit where it is due 😉:

Japan domestic value added DOWN 📉
Korea DVA DOWN 📉
Taiwan DVA DOWN 📉

Okay, what about ASEAN you may ask? Let's see 🤗

ASEAN, in the authors' words, is: Enjoying a smaller share of the bigger pie.

As in domestic value added is DOWN to 66.6% in 2011 from 71.4% in 1995 (these value-added data/input-output stuff is very dated so just go w/ it.

Wait a minute, you may ask, this is the World Bank so it must have policy implications. Let's see:

a) Everyone DVA down📉
b) China is DVA up📈 & GDP per capita is 📈🔥
c) China has most restrictive FDI for sectors that DVA is up

Conclusion: Everyone, to grow, OPEN UR MARKETS👌🏻

Wait, u must ask, for whom should you open your markets for. Hint...

Perhaps most importantly, the facts they SHOWED YOU that China has a successful strategy to move up the value chain (DVA up & restrict ur FDI & then have gov policy to grow domestic capability).

Great paper😉

By the way, in case u were confused about the question, which is the thesis of the essay (btw, also the entire document, which is anti-barriers, both tariff & non-tariff):

Should high domestic value added in exports be an objective of policy?🤔

Click like after voting 🤗💪🏻✅