Firms’ fixed investment and global value chain position: Evidence from China’s value-added tax reform

Firms’ fixed investment and global value chain position: Evidence from China’s value-added tax reform | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Firms’ fixed investment and global value chain position: Evidence from China’s value-added tax reform Qizhong Yang This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4839863/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract The increased fragmentation of production on the global value chains (GVCs) is a key trend in international trade. This study examines the causal effect of an investment in fixed assets on a firm’s position in the GVCs. It employs a combined panel data of Chinese firms spanning 2000–2007, where identification relies on a quasi-experimental design via China’s 2004 value-added tax reform to encourage fixed investment purchasing. Accordingly, investment in fixed assets decreases a firm’s GVC upstreamness of exports and imports, with a larger impact on the former, inducing a wider production stage span for GVC firms. Further trade margin analysis demonstrates that fixed investment firms import high-quality inputs from more specific suppliers, followed by increasing exports. Notably, the findings explain the causal effect as the concentration of a firm’s production operations, given specialized equipment from fixed investments, and channels through which investment affects a firm’s positions. Global value chain Value-added tax reform Production line position China Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4839863","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":336013887,"identity":"ebfae154-e519-46cc-b90b-7f486292d2b9","order_by":0,"name":"Qizhong Yang","email":"data:image/png;base64,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","orcid":"https://orcid.org/0000-0002-0690-7442","institution":"Toyo University: Toyo Daigaku","correspondingAuthor":true,"prefix":"","firstName":"Qizhong","middleName":"","lastName":"Yang","suffix":""}],"badges":[],"createdAt":"2024-08-01 06:48:25","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-4839863/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4839863/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":66646388,"identity":"49708e05-8556-475c-b17f-8a6091442adb","added_by":"auto","created_at":"2024-10-15 06:59:10","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":546627,"visible":true,"origin":"","legend":"","description":"","filename":"Manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4839863/v1_covered_24d7b503-44d1-4117-b65b-1bf99ba47e29.pdf"}],"financialInterests":"","formattedTitle":"Firms’ fixed investment and global value chain position: Evidence from China’s value-added tax reform","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Global value chain, Value-added tax reform, Production line position, China","lastPublishedDoi":"10.21203/rs.3.rs-4839863/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4839863/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThe increased fragmentation of production on the global value chains (GVCs) is a key trend in international trade. 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