Research on the relationship between global value chain and export income elasticity—statistical analysis based on Chinese industries

This article reexamines Chinese export trade from a new perspective of the embeddedness of Global Value Chain (GVC) leading to changes in export income elasticity. Based on the export demand model under the incomplete substitution hypothesis, this paper proposes the theoretical hypothesis that the embeddedness of GVC affects the export income elasticity through structural effects and bullwhip additional effect, and empirically tests the above two effects and their impact mechanisms with 2001-2015 import and export panel data of 21 industries. The results show that the embeddedness of GVC will lead to an increase in Chinese export income elasticity. On the one hand, the embeddedness of Chinese GVC is mainly concentrated in the durable goods industry, and the structural elasticity that durable goods export income is greater than that of nondurable goods will increase Chinese export income elasticity. On the other hand, due to the bullwhip effects of GVC supply chain, the embeddedness of GVC has further increased the sensitivity of Chinese exports to foreign income, resulting the increase of export income elasticity, and this effect is even more pronounced during economic fluctuations. Chinese enterprises should pay attention to the changes in export income elasticity while embedding GVC, actively optimize the export structure, improve the international competitiveness of export products, and stabilize export trade.