The 9^th Academic Luncheon of the Digital Technology and Finance

Abstract:

This paper expands the existing theoretical model by distinguishing the trade costs of intermediate goods and final goods to better match the global input-output data. On this basis, the structural model is applied to quantitatively assess the impact of RCEP on member countries' participation in global value chains and welfare level. The results show that after the entry into force of RCEP: (1) the trade creation effect will significantly increase the intra-regional value-added exports of RCEP, and the value-added trade of member countries will be transferred to the intra-regional characteristics; GVC trade, GVC participation and the level of vertical specialization in member countries have all increased. Moreover, the number of production stages of typical manufacturing industries in our country presents the characteristics of transformation and upgrading from domestic to intra-regional. (2) RCEP will significantly improve the welfare level of all member states, in which ASEAN countries get a large welfare improvement, while China and Japan have relatively small welfare effect. Second, without distinguishing between intermediate and final goods tariffs, the average welfare effect of member states would be significantly underestimated compared to the base case. In addition, the results of welfare decomposition show that the contribution of global value chain effect to the welfare growth of member countries is higher than the final goods effect. The decomposition of further differentiating the source of welfare changes shows that the welfare effect is mainly caused by the region. The paper also verifies that the welfare effects of RCEP are amplified by closer global value chain linkages and are primarily driven by intra-regional value chain effects. (3) India's accession to RCEP will change its welfare loss into a larger welfare increase, and make other member states improve their welfare to varying degrees. The conclusions of this paper will help deepen understanding of the impact of RCEP on the reshaping of global value chain and Asia-Pacific regional economic integration, and provide theoretical support and policy reference for China to speed up the building of a new system of an open economy at a higher level and promote smooth connectivity between domestic and international cycles.

Speaker Introduction:

Lamei Wu is a lecturer at the Investment Department, School of Finance, Zhongnan University of Economics and Law.  She received her PhD in Economics from the School of Economics, Xiamen University, and was jointly trained by the National University of Singapore. her research interests include international investment, international trade and international finance. The research results have been published in domestic and foreign academic journals such as Economic Research, World Economy, China & World Economy.