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China value chain index in need of the right balance

Attempt to show exports benefit buyers too comes at a time of trade tensions with the United States, and it must be seen to be transparent and credible

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Cargo boxes at the Yangshan Deep Water Port, part of the Shanghai Free Trade Zone, in Shanghai. Photo: Reuters
It can be difficult to convince anyone that a trade imbalance does not necessarily reflect the balance of economic benefit between exporter and importer, especially if the argument is being made by China and is targeted at the United States. But it is good that Beijing is making an attempt through a global value chain index that measures the growth and employment benefits of its exports to buyers. Perceptions of globalisation have already created sufficient misunderstanding and strife between industrialised and poor developing nations, without fuelling a trade war between the world’s two biggest economies. 

As we have reported, China has teamed up with the World Trade Organisation and the Organisation for Economic Cooperation and Development on creating the new index, to bolster Beijing’s argument that it is not the biggest winner from its exports, and that benefits flow on to the buyers. 

The University of International Business and Economics in Beijing is leading work on the index, which is meant to track how economies gain from involvement in different stages of the production process.

For example, according to university deputy chancellor Zhao Zhongxiu sizeable Chinese exports of semi-finished products with a cost advantage could boost the US jobs market by creating employment in research and development, design and marketing. 

University researchers have released a report showing who gains along the global chain of production and trade, claiming that skilled US labourers could benefit from Chinese exports, with the loss of blue-collar jobs being offset by job creation in the hi-tech and services sectors, provided the American labour market could adapt. 

China slams Trump for raising import duties on Chinese goods

Beijing is trying to show how, in an integrated world, Chinese growth has flow-on benefits and is an example of why globalisation is a good thing, which is not too far removed from arguments advanced when China joined the WTO. The argument is therefore not unfamiliar to American economic and trade circles, but under President Donald Trump there has been a shift in perception. 
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