Abstract:

With the increase of the cost of labor and other primary factors and the impact of the COVID-19, China’s industrial chain, value chain, and supply chain are facing tremendous pressure from “outward migration”. How to stabilize the industrial chain, value chain, and the fundamentals of foreign trade and foreign investment has become a challenging topic for the current theoretical and practical departments. Different from the existing literature focusing on the effect of China’s OFDI on the promotion of china’s status of GVC, this paper discusses the “fix chain” and “enhance chain” effects of China’s OFDI from the perspective of bilateral value chain linkage. Firstly, when OFDI goes beyond the simple function of replicating the economic activities of the home country under GVC and focuses on the building a value chain, it will obviously strengthen the bilateral value chain linkage between the home country and the host country, which may show “fix chain” function. In addition, the layout of the value chain by OFDI, due to the different specific production processes and activities transferred or arranged, may not only strengthen the forward linkage between the home country and the host country, but also may strengthen the backward linkage. This mainly depends on the motivation of multinational companies to carry out OFDI in the host country and what kind of advantageous resources of the host country want to integrate and utilize. When OFDI transfers out the production processes of industries and products that the country has lost its comparative advantage, and retains the upstream production processes and stages that it still have comparative advantages, the value chain linkage formed is shown as forward linkage. When OFDI is pursued for finding strategic assets, the value chain linkage formed is shown as backward linkage. In fact, China’s motives for OFDI are diversified rather than singular. The main aim of OFDI is to integrate and utilize global resources by going out. Therefore, China’s OFDI may have both the forward linkage effect and the backward linkage effect of the value chain. It is worth noting that when Chinese companies carry out OFDI, they can learn from the methods developed countries have used when they laid out GVC, choose some industries with a higher degree of value chain forward linkage to invest in actively, and put some low-level production processes in other countries. This will increase the degree of forward linkage of the value chain. Therefore, the development of OFDI may also show “enhance chain” function.
On the basis of theoretical analysis, this paper learns from WWZ method and constructs the bilateral value chain linkage index between China and 39 countries from 2003 to 2014. Then, we use the data of OFDI and value chain linkage index to make scatter plots. Intuitively, it is found that there is a significant positive correlation between OFDI and the overall linkage of the value chain and the forward linkage of the value chain. But the correlation between OFDI and the backward linkage of the value chain is not significant. Furthermore, this paper uses a two-way fixed effect model to empirically study the value chain linkage effect of China’s OFDI. The results show that the development of OFDI in China has significantly improved the overall linkage of value chain between China and the host country, so it shows “fix chain” effect. The effect of the forward linkage of the value chain is significantly greater than the effect of the backward linkage, thus showing “enhance chain” function. This result is still valid in the robustness test based on variable substitution method and instrumental variable method. In addition, further tests which distinguish the geographic location and income level of the host country confirms that the forward linkage effect of the bilateral value chain generated by China’s OFDI is significantly better in Europe and high-income countries than in non-European and middle-income countries. The conclusions of this paper not only help us to understand the value chain linkage effect of China’s OFDI deeply, but also provide some policy ideas for solving the challenges faced by China when it participates in the global value chain under the new situation. Therefore, this paper has some policy implications. Accelerating the “going out” approach can strengthen the linkage between bilateral value chains, so it will help China to further integrate into the GVC. In other words, it will help China to further “root” the GVC to realize the “fix chain” effect. Meanwhile, from the perspective of the specific value chain linkage method, China’s OFDI has a significantly stronger promotion effect on the forward linkage of the bilateral value chain than the backward linkage. If it is not demanding, from the point of the smile curve, forward linkage often means a higher status of GVC. From this view, China’s OFDI not only has a “fix chain” function, but also has a “enhance chain” function because it promotes the improvement of the status of GVC. Therefore, in the new stage of China’s opening-up development, especially in the development stage where “bringing in” and “going out” are both important, we should firmly grasp the OFDI as an important way to build global value chain. We should speed up the “going out” strategy, provide guarantees for enterprises to “going out” in terms of policies, facilities, trade, capital, and humanities, and accelerate the transformation of ways to participate in the global value chain to help China to “root” the global value chain, increase China’s status of the chain and accelerate the realization of the strategic goal of “towards the middle and high level of the global value chain” proposed in the report of the 19th CPC National Congress.

Key words: OFDI, GVCs, Value Chain Linkage Index

摘要：

本文从双边价值链关联角度,探讨中国开展OFDI可能具有的“固链”和“强链”效应。在理论分析的基础上,利用2003—2014年中国与39个样本国家之间的双边价值链关联指数,采用双向固定效应模型实证研究中国开展OFDI的价值链关联效应。结果表明,中国开展OFDI显著提高了中国与东道国之间的价值链总体关联程度并表现“固链”作用,且对价值链前向关联程度的提升作用明显大于后向关联,进而呈现一定的“强链”功能。进一步的异质性分析发现,中国对外直接投资的价值链关联效应在欧洲地区和高收入国家的作用效果好于非欧洲地区和中等收入国家。

关键词: 对外直接投资, 全球价值链, 价值链关联指数