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Free Trade Agreements and International Production Networks: China and the Automotive Industry1March 8th, 2010
It is inconceivable to consider International Production Networks (IPN) in Asia, however it is defined, without taking into account the important role that China plays within such networks. The integration of China into the global economy in general and East Asia in particular has further deepened international production fragmentation to unprecedented levels (Haddad, 2007; Athukorala, 2007). At the turn of the decade, China’s processing exports (exports that are produced from processing and/or assembly of imported inputs) accounted for nearly half of its total exports. In 2006, 51.5% of China’s intra East Asian trade was in machinery products, of which more than half was trade in parts and components. The rate of annual growth in parts and components with its East Asian partners between 1993 and 2006 was a staggering 22.7% (Kimura and Obashi, 2008). The drivers of the proliferation of IPNs as described in earlier chapters can be clearly seen in China. Three drivers of this process as
