BOFIT Viikkokatsaus / BOFIT Weekly 2021/48
The OECD released its latest Trade in Value Added (TiVA) assessment in mid-November. The figures cover 66 economies and 45 unique industrial sectors between 1995 and 2018. China’s final consumption of foreign value-added has risen rapidly in recent decades, and in 2018 was already 75 % of the foreign value added consumed by the United States and 90 % that of the euro area. Of the foreign value added China consumed in 2018, 12 % came from the United States, 8 % from Japan, 7 % from South Korea, 5 % from Germany and 5 % from Australia.
The consumption of Chinese value added abroad has risen briskly and OECD figures show that other countries now consume as much Chinese value added as American value added. The co-dependency of China and the US is highlighted by the fact that the largest consumer of Chinese value added is the US (24 % share in 2018). Japan was the second largest value added consumer with an 8 % share and other countries’ shares were below 5 %. Correspondingly, China was the largest source of foreign value added for the US.
For Finland in 2018, the United States was the main consumer of Finnish exported value-added with share of over 10 %, while China was on par with Sweden and Germany, each with a roughly 8 % share. Russia was the fifth largest consumer of Finnish value added with nearly 6 % share. Despite China’s sizeable and steadily growing percentage share of Finnish value added consumed abroad, Finnish value added consumed globally has increased modestly, especially since the 2008 global financial crisis. As a result, Finland’s share of China’s foreign value added consumption has shrunk to below 0.3 % in 2018. It was three times higher at the start of the millennium when China joined the WTO (for more, see BOFIT's latest annual China Information Blast, presentation slides and video in Finnish).
The United States is the largest consumer of Finnish value added
Sources: OECD TiVA 2021 and BOFIT.