Abstract
This paper analyzes China’s efforts to move up the value chain with a new theoretical framework that looks at both supply- and demand-side factors. While China can impact its productive capabilities directly through government policy and firm investment, market conditions and value chain relations are not so amenable. China’s latecomer status puts it at a disadvantage in forming its own international value chains. However, its fast-growing domestic market affords China a unique opportunity to cultivate its own value chain and competitiveness based on familiarity with consumer preferences and demands at home.
