An Anatomy of China’s Export Growth: Comment

Amiti and Freund wrote a revealing and stimulating piece on characteristics of China’s export dynamics. I summarize their main findings below and offer my comments under each of their findings. Finding #1. The skill content of China’s exports increased from 1992 to 2005, but the increase was driven almost entirely by China’s processing exports. There was little skill-upgrading found in China’s non-processing exports. This is a striking result to me. To comment on this result, we need to understand the method used by the authors. The authors first rank China’s 5-digit ISIC industries in ascending order of skill intensity. Due to unavailability of relevant Chinese data, the industry skill intensity ranking is based on Indonesian data. The authors then compute the cumulative export shares of the industries. If a country’s cumulative export shares of low-skill industries decrease over time, it is considered as evidence of rising skill content of the country’s overall exports. The authors find such a decrease in China’s manufacturing exports in the period of 1992 to 2005, but no such a decrease in China’s non-processing manufacturing exports in the same period