ABSTRACT
Our analysis describes the major developments of China’s localization policies in recent years, such as the launch of the domestic indigenous firm innovation program and Made in China 2025. The implicit local content requests that are included in these major industrial policy programs for different industries are discussed. A quantitative method to estimate domestic content in exports based on national input-output tables is proposed by extending the approach developed by Koopman et al. (2012). The proposed accounting framework is applied to China’s 2012 and 2017 Input-Output Tables published by the National Bureau of Statistics and detailed trade statistics from China Customs. Estimation of the domestic content in China’s total and merchandise exports by firm ownership, major destination markets and 68 manufacturing industries are reported; there is no empirical evidence that those policy measures proposed in recent years by the Chinese government have played any significant role in promoting domestic content in China’s gross exports, at least at the aggregate level.
