Determinants of China’s Industrial Advantage: Evidence from Eighteen Manufacturing Sub-industries in Forty-Two Countries

Since China’s manufacturing sub-industries are diverse and have different advantages, the way to improve industrial advantage in the global value chain is specific. It is crucial to identify the determinants of different kinds of China’s manufacturing industries in the new-normal state. Based on data from forty-two countries, this paper examined the influencing factors of four different advantage types of China’s manufacturing with outward foreign direct investment (OFDI). By calculating the advantage index (ADI), eighteen manufacturing sub-industries of China were classified into four types, i.e., advantageous, disadvantageous, parallel advantageous, and decreased advantageous. And the empirical studies showed that the influencing factors of industrial advantage (IA) are varied for the four advantage types. For those that were labelled advantageous, a focus on each production factor would assist in improving Chinese manufacturing competitiveness, for those labelled disadvantageous and parallel advantageous, expanding local industrial scales and improving creativity abilities were identified as being the most effective method for increasing productivity and global industrial value chain positions, and for those labelled as decreased advantageous, investing in low-end factors in the host country would be the best way to expand the market.