GLOBAL VALUE CHAIN,

REGIONAL TRADE
NETWORKS AND SINO-EU
FTA
Presented By:
Sikandar saleem
Fizza zain
Maryam shah
Salman saleem

Structural Change and Economic Dynamics

YAN ZHOU,SHUMEI CHEN,MEI CHEN
INTRODUCTION

■ China Become member of WTO in 2001

■ So far, Seventeen FTAs have been signed between China and its 25 trade partners.
■ 25% of Commodity trade
■ 51% of Service trade
■ 67% of two way investment In 2017
■ Between 2006 to 2016, trade increase by 7.64% annually.Totalled at $472.48
billion.
■ Investment Between China and EU increase by 110.5%(BIT)
INTRODUCTION

■ The EU contributed 12.9% of the total of Chinese intermediate goods.

■ China represented 5.7%, second to the United States’6.9% of the EU’s total
■ The interdependence brought negative impact in EU economy of ‘Made in china’.
■ China–EU trade in intermediate goods requires highly compatible and coordinated
rules from both sides.
2. Literature Review

■ China is optimizing its FTA layout with a strong global vision

■ Economic and trade cooperation between China and the EU has grown rapidly in
recent years
■ Germany’s exports to China will double in the next decade
 3. Research methods, indicator
selection and data sources
■ Inter-Country Input-Output Model (ICIO)
■ New revealed comparative advantage (NRCA) index
 4. Value-added assessment of China–EU economic
and trade relations
■ Comparing China’s GVC position with some EU member states before the trade surplus, and
the comparative advantage between China and the EU member states is re-examined.
■ GVC position
– Smiling curve
■ Trade balance
– The overall trend of both total value and value-added methods is the same, indicating that
China’s trade surplus with the EU member states is expanding, especially after China’s entry
into the WTO in 2001.
■ Comparative advantage
– Cannot be confused with industrial competitiveness
 5. Rationales for the China-EU FTA
■ From market-driven, trade-driven, and value-driven factors, a China–EU FTA would be
economically feasible for both sides.
■ Market-driven rationale
– FTAs may result in freer, mutually beneficial trade through the exchange of market access
■ Trade-driven rationale
– Intermediate goods (Made in the World)
■ Value-driven rationale
– China’s export enterprises have been dumped at less than fair market value
– FTA will encourage china to revise trade structure and value chain
6. Empirical study of the China-EU FTA
• Market, value and trade drivers are feasible for both
• The structure of Value added expanded by 17.7%
• China should focus on improving value added capabilities
• Due to dominance of Inter industry trade DVA of EU exports to china is high
• If Tariffs removed between EU and Japan/Korea – China upgrading blocked
Conclusion

■ Manufacturing industry located at the bottom

■ Value adding ability is weak
■ Trade surplus and industrial competitiveness over EU is overestimated
■ MVA of EU exports to china upward trend, stronger dependance
■ Trade and investment rules to be set internationally by China
■ Upgrade industrial standards to conform with international standards
■ More trade and investment rules on FTA before rule making internationally and
regionally
■ Lower imports