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GTAP Resources: Resource Display

GTAP Resource #7153

"EU-China Decoupling by the numbers: mapping the realignment of global value chains"
by Cui, Hao (David), Ilaria Fusacchia and Luca Salvatici

This work investigates how tensions between highly interdependent economies will impact trade, income, and GVCs. Specifically, we analyze the role of complex supply chain linkages in determining how demand for value-added (e.g. remuneration of primary factors) responds to changes in international relative prices. We rely on a set-up featuring General Equilibrium (GE), GVC module, and, importantly, differentiating demand for goods according to their use for final or intermediate consumption. Decoupling has indeed a direct impact on targeted products, but GVCs, along with GE effects, trigger additional consequences that are worth investigating. In particular, by tracing the impact of decoupling along the GVCs, we assess to what extent the EU's exports are affected due to reduced competitiveness led by vertical linkages, and we find a loss of EU competitiveness in all markets as production costs increase in industries using Chinese imported goods as inputs. By the same token, restricting Chinese exports to the EU market that contain previously exported EU intermediate inputs also hurts the EU value added. These are the effects that are tackled in this work.

Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Created: Salvatici, L. (4/6/2024)
Updated: Batta, G. (5/5/2024)
Visits: 104
- Supply chains
- Asia (East)
- European Union

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