No. 2008-03-B
OFFICE OF ECONOMICS WORKING PAPER
U.S. INTERNATIONAL TRADE COMMISSION
Robert Koopman*
Zhi Wang*
U.S. International Trade Commission
Shang-jin Wei
Columbia University and NBER
March 2008
*The authors are with the Office of Economics of the U.S. International Trade
Commission. Office of Economics working papers are the result of the ongoing
professional research of USITC Staff and are solely meant to represent the
opinions and professional research of individual authors. These papers are not
meant to represent in any way the views of the U.S. International Trade
Commission or any of its individual Commissioners. Working papers are
circulated to promote the active exchange of ideas between USITC Staff and
recognized experts outside the USITC, and to promote professional
development of Office staff by encouraging outside professional critique of
staff research.
Address correspondence to:
Office of Economics
U.S. International Trade Commission
Washington, DC 20436 USA
How Much of Chinese Exports Is Really Made in China?
Assessing Foreign and Domestic Value-Added
in Gross Exports
How much of Chinese exports is really made in China?
Assessing foreign and domestic value-added in gross exports
Robert Koopman and Zhi Wang
United States International Trade Commission
Shang-Jin Wei
Columbia University, CEPR, and NBER
Abstract
As China’s juggernaut export machine employs many imported inputs, there are many policy
questions for which it will be crucial to know the extent of domestic value added (DVA) in its
exports. The best known approach is the concept of “vertical specialization” proposed by
Hummels, Ishii and Yi (2001) (HIY for short). This approach is not appropriate for countries that
engage in a lot of processing exports such as China, Mexico, and Vietnam. We develop a general
formula for computing domestic and foreign contents when processing exports are pervasive.
Because the new formula requires some input