China's evolving role in global production networks: the decoupling debate revisited

Abstract

This paper examines the implications of the evolving role of China in East-Asia centred global production networks for regional and global integration of the Chinese economy. The main focus is on the 'decoupling' thesis, the notion that China's rise has been instrumental in reshaping the East-Asian region as a self-contained economic entity with potential for maintaining growth dynamism independent of the developed economies. The analysis is based on a new dataset that permits delineating the role of the other East Asian countries as suppliers of parts and components for assembly bases in China and China's dependence on third-country markets. We find that China's reliance on East Asian neighbours for parts and component supply has significantly declined in recent years, reflecting deepening of China's engagement in production networks. China is also emerging as a significant supplier of parts and components within global production networks. There has been a notable geographic diversification of China's assembly exports with a significant increase in the shares of extra-regional developing countries, but Western countries still absorb a sizeable share. Show more