Low-End Lock-In of Chinese Equipment Manufacturing Industry and the Global Value Chain

Abstract

This paper focuses on the low-end lock-in problem faced by China’s equipment manufacturing industry, which is heavily involved in the global value chain (GVC). Specifically, we use the production chain length system and total trade accounting framework to measure some physical and economic location indicators. The physical location measures the forward production length, backward production length, and the location index, whereas the economic location measures various types of value-added in industry exports. The results show that China’s equipment manufacturing industry has deepened its physical and economic low-end lock-in with the gradual deepening of China’s equipment manufacturing industry’s participation in GVC. From a segmented perspective, the manufacture of fabricated metal products (except machinery and equipment) and electrical equipment has the deepest degree of low-end lock-in physical location; the manufacture of computer, electronic, and optical products has the deepest degree of economic low-end lock-in. Therefore, China should accelerate its breakthroughs in the low-end locking dilemma and climb the GVC by adopting various measures such as accelerating the implementation of the intelligent manufacturing strategy, developing service-oriented equipment manufacturing industries, cultivating the domestic market, realizing low-carbon manufacturing, and improving enterprises’ independent innovation capabilities.