Transmission and Diffusion Effect of Sino-US Trade Friction along Global Value Chains

This paper explores the transmission of Sino-US trade friction under the GVC division of labor and its diffusion effect from the perspective of third-country's value-added embedded in China's export to the US. It turns out that Sino-US bilateral trade shock may have a multilateral effect in the age of GVCs. The increase of US tariff on China will significantly reduce the value-added rate of trade partner and the third-countries embedded in China's exports to the US, thus making the impact of Sino-US trade shock pass on the countries along the GVCs. Besides, this "ripple effect" is especially notable through processing trade in Asian regional value chains and non-OECD countries. The conclusions of this paper have certain enlightenment significance to the current Sino-U.S. trade friction.