The sophistication of China’s exports, imports and intermediate products

According to a number of studies, China’s bundle of exports is relatively sophisticated. This paper investigates this finding by introducing an import sophistication measure and dividing products by type into Consumption, Capital and Intermediate goods. The results show that China’s imports are actually more sophisticated than exports and highly sophisticated in relative terms. Controlling for import sophistication, income and human capital, we find that China’s exports are highly sophisticated for Intermediate products only. Consumption goods are not highly sophisticated, while Capital goods are less sophisticated than the average. Despite being relatively sophisticated China’s exports are of low quality according to different measures based on unit values. Once we split the market into price segments we see that the sophistication of China’s exports is exceptional for lowpriced Intermediate and Capital products only.