Technological Improvement in China’s Export Sophistication

Chen Lili and Gong Jing
Southwestern University of Finance and Economics (SWUFE), Chengdu, China

Abstract:  This paper has developed a measurement approach that integrates price with the product technical content initiated by Lall et al. (2006), i.e., dividing HS6-quantile products into high-end, middle-end and low-end levels through the quantile ranking of prices of the same product from different countries or regions in a target market. Our estimation has discovered that due to the lack of product price differentiation, traditional method for the measurement of product technical content overestimated technical content of the low-end segment in the same category of products while underestimated technical content of the high-end segment in the same category of products. Re-calculation based on Rodric’s result indicates that specialness of Chinese exports is mainly reflected by high-end and middle-end products. In addition, the competition result of the sophistication of Chinese exports indicates that since the middle of the 1990s, the sophistication of Chinese exports has remained relatively low compared with the average level of the world and developing countries; from an economic perspective, improvement in the sophistication of Chinese exports primarily derived from middle-end and low-end products; from a category-specific perspective, improvement in the sophistication of Chinese exports primarily derived from low-technology export products.
Keywords: export sophistication, product technical content, price, high-end products

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