A regional measurement of China’s processing trade from the perspective of vertical specialization: 2012–2017

Abstract Since the 2010s, the proportion of processing trade in total trade in China has been declining year by year. Meanwhile, given the different stages of economic development across regions in China, the situation of processing trade might vary by region. This paper analyzes the realities of processing trade in different regions of China based on the regional input–output tables of 28 provinces, cities, and autonomous regions, measuring the Vertical Specialization (VS) index. The analysis reveals that the VS index levels in the eastern regions are higher compared to the central and western regions. From 2012 to 2017, the VS index in the eastern regions showed a declining trend, while in the central and western regions, many areas experienced an increase. Second, decreasing reliance on import inputs from processing exports was observed in the results of a newly proposed indicator. At last, the analysis of the VS index and per capita GDP shows that although the VS index rises with increases in per capita GDP, once per capita GDP surpasses a certain level, the VS index may shift from increasing to decreasing.