Moving Up the Value Chain in ICT: ASEAN Trade With China

Abstract

The rise of China increased competition for foreign direct investment and exports for the ASEAN economies. It also increased ASEAN trade with China. But, are ASEAN countries able to move up the value chain in their trade with China? The objectives of this article are to examine upgrading in the information and communications technology (ICT) value chain through changes in the product quality of parts and components (PNC) exports from ASEAN to China and the influence of these changes on their ICT trade with China. The main findings indicate that there is little or no product upgrading in the most important SITC 776 sub-component of the PNC exports from the four major ASEAN economies (ASEAN-4) to China after 2005. It is also found that improvements in product quality are more apparent for SITC 772 but this product group constitutes a small share in total manufactured exports from the ASEAN-4 to China. Lastly, with little or no product upgrading, exporters from the ASEAN-4 have shifted to exports of non-PNC goods to China. This shift has enabled the overall ICT exports from the ASEAN-4 to China to continue to grow for the period of this study.

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