Reasons behind the Increase in China’s Exports of Electrical and Electronic Products
exports and have increased percentage-wise from 1993 to 1998. Two independent variables help explain this increase; the more important contributing factor is the increase in processing trade, and the less influential variable is industrial upgrading. These two factors directly influence the increasing percentage of electronics in exports, but it must be noted that each factor is a situation created by numerous other factors, which in turn have their own causes, resulting in a chain of causations. Thus, the two main factors are in actuality two chains of causations. The data on electronics is retrieved from the UN Comtrade database. The commodities are categorized according to two-digit HS1992 codes. Out of the 97 categories, three categories have always been in the top-four in terms of percentages of total exports from years 1993 to 2008; these categories are “electrical, electronic equipment,” “articles of apparel, accessories, knit or crochet,” and “articles of apparel, accessories, not knit or crochet” (United Nations Statistical Division). The two categories of apparel are combined into one because, for the purposes of this paper, it is not necessary to distinguish knit apparel from non-knit. First, I have compared the percentages of apparel in total exports to the percentages of electrical and electronic equipments 58
(“electronics” for brevity) over the years 1993 to 2008. It is important to compare the export trends of electronics to those of apparel because both categories are prominent in China’s exports. Figure 1 suggests that before 1995, apparel was slightly more dominant than electronics, but in the following years, electronics have grown at a much faster rate than apparel although apparel certainly has continued to grow. Shown as percentages of total exports in figure 2, the contrast between apparel and electronics is glaring. The percentage of electronics exhibits a continual upward trend while the percentage of apparel exhibits a downward trend. Why do exports of electronics increase much faster than exports of apparel while both are top categories of export commodities? To answer this question, I draw on insights from the existing literature by combining the opinions of the two camps. Chain I: Processing Trade The increase in processing trade (in dollar value and percentages) is the main reason for the increase in the percentage of electronics in total exports. While China is exporting an increasing amount of electronics, it does not participate in much valueadded production. In fact, China’s
DUKE EAST ASIA NEXUS
Vol 1 Issue 2