MEASURING THE TECHNOLOGY CONTENT OF CHINA'S EXPORTS

This paper constructs a measure of technology content of exports (TCE) and applies it to China. There have been increasing concerns in China about its exports being mainly on the low end. Recent research found however that China’s exports were much more sophisticated than its development level implies, yet carried exceptionally high price discounts. Our TCE measure incorporates in one index the technology sophistication ranking across products and the quality ranking of country varieties within product. Using TCE indices we reexamine the features of China’s exports found in earlier studies and identify several new features. We find that after the mid 1990s China’s country-level TCE became compatible to its development level. China’s product-level TCE was significantly below the benchmark and the gap had been widening over 1991-2001. At both the industry and product levels we find a positive correlation between export-share growth and TCE level. This export-share effect appeared to be the main force sustaining China’s overall TCE growth.