Rethinking the semi-periphery: China's impact on global value chains and environment

The urgency of addressing global warming necessitates rapid carbon emission reductions, a goal increasingly pursued through engagement with global value chains (GVCs). This paper investigates the complex interplay between a country's GVC participation and its impact on the global economic and environmental landscape. Employing a novel assessment framework grounded in a global multi-regional input-output model and counterfactual analysis, we analyze the effects of one country's GVC engagement on global economic and environmental outcomes. Our analytical framework accommodates inter-country differences in price levels and production structures, and it tracks intermediate inputs besides final demands in the global network. Drawing on the world-systems theory, we utilize China—a semi-peripheral nation—as a case study to explore how dynamic GVC participation can exacerbate or alleviate the tension between national and global economic and environmental goals. Our findings demonstrate that China's GVC engagement has been evolving. From 1995 to 2022, China consistently contributed to the reduction in global carbon emissions. Since 2015, however, the impacts of China's GVC participation have diverged considerably, yielding six distinct impact patterns on other countries. The evidence suggests that China is undergoing a transition towards a hybrid semi-peripheral/core status.