This paper analyses the rapid progress and the consequences of Chinese integration in World production networks. This structural analysis of Chinese foreign trade shows that its outstanding performance in world markets is directly linked to its involvement in the international segmentation of production processes. First, Chinese trade policy in favour of processing activities proved very successful in creating export-oriented industries based on imported intermediate goods. Production sharing with trade partners has resulted in highly internationalized and competitive industries, while China's traditional export sector has remained sluggish. Second, China displays a strong specialization in the downstream stages of production process, associated with large deficits in the upstream stages(intermediate goods). This vertical division of production has enable China to rapidly diversify its exports of consumption goods, and to create strengths in capital goods exports, especially in electrical machinery. Imports of parts and components embody a large share of high technology and represent an important channel for the transfer of technology into China. Third, China's trade in intermediate goods is heavily concentrated within Asia including Korea, confirming that production sharing is above all a regional process. China is an assembly country, but while in traditional industry (textile and clothing), China's exports of final goods concern consumption goods and are mainly directed towards Asian markets, in new industries (machinery and electrical machinery), China's exports consist mostly of capital goods are mainly directed to the European and American markets.

This paper analyses the rapid progress and the consequences of Chinese integration in World production networks. This structural analysis of Chinese foreign trade shows that its outstanding performance in world markets is directly linked to its involvement in the international segmentation of production processes. First, Chinese trade policy in favour of processing activities proved very successful in creating export-oriented industries based on imported intermediate goods. Production sharing with trade partners has resulted in highly internationalized and competitive industries, while China's traditional export sector has remained sluggish. Second, China displays a strong specialization in the downstream stages of production process, associated with large deficits in the upstream stages(intermediate goods). This vertical division of production has enable China to rapidly diversify its exports of consumption goods, and to create strengths in capital goods exports, especially in electrical machinery. Imports of parts and components embody a large share of high technology and represent an important channel for the transfer of technology into China. Third, China's trade in intermediate goods is heavily concentrated within Asia including Korea, confirming that production sharing is above all a regional process. China is an assembly country, but while in traditional industry (textile and clothing), China's exports of final goods concern consumption goods and are mainly directed towards Asian markets, in new industries (machinery and electrical machinery), China's exports consist mostly of capital goods are mainly directed to the European and American markets.

Chinese Economy, Production Processes,International Segmentation, Intermediate Goods