# A Study on China’s Cultural Product Export Trade and Its Forecast Based on Hausmann’s Export Complexity

Authors: Juhua Ye; Xinxing Luo
Journal: Wireless Communications and Mobile Computing
 (2022)

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## Abstract

The cultural and creative industries are another fast-growing new industry after the information technology industry and have become a major driving force in global international trade and economic development. In this paper, the index of “export complexity” is chosen to measure the export complexity of cultural and creative products in China and 42 representative countries selected by UNCTAD’s “Creative Economy” database for measurement and comparative analysis. This paper uses a grey prediction model to forecast the relative export complexity of China’s cultural and creative products. The prediction results show that from 2016 to 2025, the relative export complexity of China’s cultural and creative products is less than 1, but the value is increasing, and the gap between the export structure of China’s cultural and creative products and the global average in the increasingly competitive international market will narrow year by year.


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## Body

## 1. Introduction

By combining culture, creativity, and technology, the cultural and creative industries have become one of the pillar industries for global economic development [1]. It is necessary to actively expand overseas cultural markets, strengthen cultural exchanges and cooperation with countries along the “Belt and Road,” and build a resource base of core cultural products, so that the influence of Chinese culture can continue to grow, national cultural soft power and international discourse can be further enhanced, and the development of world cultural diversity can be promoted [2].Modernization is based on industrialization, post modernization is based on knowledge, and creative industry is knowledge economy. As the cultural and creative industry is a new industry, relatively little research has been conducted on cultural and creative products [3]. Previously, most scholars’ researches on cultural and creative products started from the perspective of studying the international competitiveness of cultural and creative products. These researches involve the export structure of cultural and creative products, and their researches use traditional indicators, such as indicators of displayed comparative advantage, international market share, and trade competitiveness index [4]. These indicators are mainly measured by using the international trade scale of products, which causes the analysis with such indicators to focus on trade volume and ignore the influence of export structure [5–9].At present, the export scale of China’s cultural and creative products has ranked the first in the world and holds an absolute advantage in terms of export scale [10]. However, it is not comprehensive to judge the development of China’s cultural and creative product exports only by using the trade scale, and we should also consider whether the export structure of cultural and creative products is reasonable. As cultural and creative products are a large category concept, the various subproducts they contain have different levels of productivity [11]. If the proportion of products with high productivity in a country’s exports is high, then the country’s product exports will be more competitive in the international market. The competitiveness of China’s cultural and creative products in the international market will only be improved if the trade structure is improved while the trade scale is expanded, and the share of cultural and creative products with higher productivity in the export value is increased. This paper will focus on analyzing the current development of China’s export structure of cultural and creative products and forecast the changes of the export structure.This paper will use Hausmann’s export complexity indicator to quantify the structure of a country’s exports of cultural and creative products. Compared to traditional indicators, the export complexity indicator not only includes the international trade volume of the product but also the productivity of the exported product, which gives a more comprehensive picture of a country’s export level. At the same time, the quantitative data facilitates more accurate country comparisons and provides a basis for subsequent empirical analysis.


## 2. Related Work

At present, scholars’ research on China’s foreign trade of cultural and creative products mainly focuses on two aspects: one is to study the factors affecting the export of cultural and creative products, and the other is to study the international competitiveness level of China’s cultural and creative products. Related to the export structure of cultural and creative products is the research on the level of international competitiveness, which mainly involves descriptive statistical analysis of the current situation of China’s cultural and creative products exports or measurement using indicators measuring international competitiveness. [12] proposed that China’s foreign imports of cultural and creative products are increasing year by year, but the growth rate is slow and the relative share of international market production is also decreasing, which presents a great contrast with the significant increase in the share of Chinese cultural and creative product exports in the international market, and China is a large exporter and small consumer of cultural and creative products. [13] measured that the international market share of China’s cultural and creative products has reached over 15%, but the international market share of cultural and creative services is significantly lower. [14] After measuring the international market share of various subcategories of cultural and creative products, it is suggested that China’s cultural and creative product exports are mainly design products, handicrafts, and new media, and the export structure is unbalanced.From the perspective of the Revealed Comparative Advantage Index (RCA Index), [15] concluded that the Revealed Comparative Advantage Index of Chinese cultural and creative products had experienced a slight decline from 2002 to 2009, and although it had declined, it was still higher than those of major countries in the cultural and creative industries such as the United States, the United Kingdom, and South Korea in general. The relationship between China, Japan, and South Korea in the trade of cultural and creative products shows strong complementarity, and fierce competition China should formulate a sound strategic plan for cultural and creative development, vigorously cultivate and introduce high-end talents in cultural and creative industries, and pay attention to the development of intra industry trade of cultural and creative products with other countries [16]. After measurement, it is proposed that the international competitiveness of China’s cultural and creative products in the categories of crafts, design, and visual arts is higher, and the development trend is more stable. In contrast, the international competitiveness of music and audiovisual products is weaker, and the international competitiveness of audiovisual products has experienced a significant decline. The results measured by the Trade Competitive Advantage Index are the same as those measured by the Display Comparative Advantage Index [17]. A more detailed analysis shows that the carpets, festive items, paper products, fashion, and toys included in the handicraft and design sectors, where the international competitiveness of cultural and creative products is outstanding, are all labor-intensive goods, and these goods make use of the significant advantage of labor costs to achieve their international competitiveness [18]. The explicit competitive advantage index of Chinese cultural and creative products is measured and found that the overall explicit competitive advantage index of Chinese cultural and creative products is high, and the international market competitiveness is strong. Among them, the explicit competitive advantage index of handicrafts and design products has been maintained at a high level and has strong international competitiveness [19, 20].


## 3. Basis for the Construction of an Export Complexity Indicator System

The position of a country’s product in the global market or its level of competitiveness is related to that country’s income level. The indicator uses the share of a country’s exports of a product in global exports of that product as a weight, weighted by the level of national income per capita, and is calculated as follows:(1)TSIk=∑jxkjXkYj.Michealy’s calculation gives a straightforward measure of the competitiveness of a product, but the weights make the calculated results ignore the effects of exporting.The calculation of a country’s export sophistication is a two-step process that begins with the calculation of the productivity level of each product, which Hausmann calls the PRODY index, calculated as follows:(2)PRODYk=∑jxkj/Xj∑jxjk/XjYj,wherek refers to products, J refers to the country, Yj refers to the per capita GDP level of country j, xkj refers to the export volume of K products of country j, and Xj refers to the total export volume of country J. PRODY index is very similar to the trade specialization index proposed by Michely. They are weighted for the level of per capita income, but the difference is that PRODY index uses the explicit comparative advantage as the weight [21–23], which can fully consider the impact of small exporting countries on the calculation of productivity level. After calculating the productivity level of various products, it is necessary to calculate the export complexity of a country, which is named EXPY index by Hausmann. EXPY index is a simple weighting of PRODY index. The weight is the proportion of the export volume of various products of a country in the total export volume. Its calculation formula is as follows:
(3)EXPYi=∑ixilXiPRODYl,wherei refers to the country, and l refers to the product. The higher the EXPY index of a country, the higher the complexity of the products in its export basket, and Hausmann and Rodrik demonstrate that countries with higher export basket complexity also have higher economic growth rates.In this paper, the EXPY index proposed by Hausmann and Rodrik is applied to China’s exports of cultural and creative products. In applying it to China’s exports of cultural and creative products, the productivity levels of each of the seven major categories of cultural and creative products, PRODY, should first be calculated as follows:(4)PRODYk=∑jxkj/Xj∑jxjk/XjYj,(5)EXPYChina=∑ChinaxlXPRODYl,wherel refers to various types of cultural and creative products.After calculating the export complexity of China’s cultural and creative products, compare it with the export complexity of the world’s major cultural and creative product exporting countries and analyze the competitiveness of China’s cultural and creative products in the international market and the position they occupy in the international division of labor [24, 25].


## 4. Analysis of Results

### 4.1. Chinese Exports Show Sexual Symmetry

The details are shown in Table1.Table 1
Indicative symmetric comparative advantage indices for various categories of Chinese exports.
SITC0SITC1SITC2SITC3SITC4SITC5SITC6SITC7SITC8SITCA20130.186-0.2990.3460.147-0.233-0.1280.249-0.7180.2300.14220141.121-0.1370.2380.069-0.23-0.480.5970.2980.1190.11220150.009-0.0340.102-0.089-0.211-0.1780.118-0.3390.3890.0762016-0.0150.0101-0.702-0.2460.272-0.2890.079-0.3870.5020.1412017-0.064-0.0970.161-0.303-0.2080.147-0.2890.4780.1110.1142018-0.301-0.502-0.261-0.658-0.3010.1080.103-0.1870.4030.0982019-0.268-0.587-0.362-0.1530.698-0.3540.089-0.0620.4230.0982020-0.355-0.729-0.587-0.716-0.471-0.3870.1470.0380.4180.1152021-0.258-0.214-0.235-0.254-0.325-0.124-0.1480.2210.1480.185


### 4.2. Analysis of the Comparative Advantage of Resource-Intensive Products

The analysis in Figure1 shows that resource-intensive products had a clear comparative advantage in China in the 1990s, with SITC0 and SITC2 both having an index of revealed symmetric comparative advantage greater than 0 between 2013 and 2021 and SITC3 also having an index of revealed symmetric comparative advantage greater than 0 between 2013 and 2015. However, SITC1 and SITC4 did not have a comparative advantage, as they always had a negative value for the displayed symmetrical comparative advantage. In the long-term, the RSCA index for resource-intensive products as a whole tends to decline [26, 27].Figure 1
Indices of demonstrated symmetric comparative advantage for resource-intensive products (2013-2021).After 1996, the RSCA value for all intensive products falls below 0, and even after 2021, the index falls below -0.5 (except for SITC0, i.e., foodstuffs and products mainly for food or animals), indicating an increasing comparative disadvantage for SITC01, SITC2, and SITC3.


### 4.3. Analysis of the Comparative Advantage of Capital and Technology-Intensive Products

The trend of SITC5 (chemicals and related products) and SITC7 (machinery and transport equipment), which are capital- and technology-intensive products in our country, is very different, as seen in Figure2. In terms of year-on-year change, the RSCA index for SITC5 has remained around -0.2 between 2013 and 2021, but in the last 10 years, the RSCA index for SITC5 has fallen to -0.4, indicating that its comparative disadvantage has been increasing year on year. In contrast, SITC7 (machinery and transport equipment) was at a comparative disadvantage until 2013, when its index of revealed symmetrical comparative advantage was always less than 0. However, the change in the index shows an upward trend over the past decade from -0.862 to 0.075, and the RSCA index changed from negative to positive from 2013 onwards. The comparative advantage of SITC7 has been growing rapidly over the last decade.Figure 2
Index of demonstrated symmetric comparative advantage for capital- and technology-intensive products.


### 4.4. Analysis of the Comparative Advantage of Labor-Intensive Products

In China, labor-intensive products have long been the traditional export products in which we have a comparative advantage in the international market. It is clear from Figure3 that the RSCA indices for manufactured goods (SITC6) and miscellaneous goods (SITC8), both classified by material, have been above zero over the past 20 years, which fully demonstrates the clear advantage of our labor-intensive products in the international market. In contrast to SITC6, where the RSCA index varies steadily from year to year around 0.1, the RSCA index for SITC8 miscellaneous products has reached 0.4 since 2013, indicating a significant comparative advantage in the international market. This is in line with the basic economic situation in China, where the traditional export commodities are labor-intensive products, such as clothing and clothing accessories, shoes, and leather products, which account for a large proportion of total exports.Figure 3
Indices of comparative advantage for labor-intensive products showing symmetry.From the analysis of the data presented in Table1, it can be seen that since the mid-1990s, comparative advantage has been transformed into comparative disadvantage, and the disadvantage has been increasing year by year, concentrating on resource-intensive products in China. The value of SITC0 has reached below -0.3. At the same time, the share of primary products in China’s total exports has also changed considerably. From the performance figures of each stage, the share of primary products in 2000 was 47% on average, but this figure has dropped to 28% by 2021, and even to less than 6% in 2008, proving that primary products are no longer the core products of China’s exports.


### 4.5. Analysis of the Results of the Calculation of the National Export Comparative Advantage Index

The index is calculated between (-1, 1), and the comparison of the results shows that the comparative advantage of the country’s exports in the current period is greater as the value increases.China’s import and export trade has been in a continuous trade surplus since the 1990s, with imports much higher than exports. This trade situation can be clearly seen in Figure4, where the country’s export comparative advantage index is above zero in all years from 2013 to 2021, and in general, China’s exports have a clear comparative advantage and are more competitive.Figure 4
Country export comparative advantage index.The CRSCA index shows a significant increase from 0.07 to 0.14; the new round of CRSCA index decline started in 2013, and the competitive advantage of China’s export products gradually disappeared as the index declined; in the decade after China’s accession to the WTO, in the decade after China’s accession to the WTO, China’s national export comparative advantage index began to rise again, indicating that China’s export products have regained their competitiveness and comparative advantage in the international market.Although the relative prices of China’s exports have increased as a result of the reduction of tariffs, the further opening of markets, and the appreciation of the local currency, the export advantage has not been affected, indicating that external factors have had less impact on the exports of China’s products.The above analysis shows that after eight years of rapid economic development in the 1980s, the structure of China’s export products was optimized, with resource-intensive products in particular transforming into labor- and capital- and technology-intensive products. Labor-intensive products, China’s traditional export products, have always maintained a strong competitive advantage in the international market, but in the last decade or so, capital- and technology-intensive products have also begun to emerge. In 2021, China’s top five trading partners are ASEAN, the European Union, the United States, Japan, and South Korea. In the same period, China’s import and export to countries along the “the Belt and Road” reached a historical high. On the whole, the competitiveness and comparative advantage of China’s export products in the international market is still relatively significant.


## 4.1. Chinese Exports Show Sexual Symmetry

The details are shown in Table1.Table 1
Indicative symmetric comparative advantage indices for various categories of Chinese exports.
SITC0SITC1SITC2SITC3SITC4SITC5SITC6SITC7SITC8SITCA20130.186-0.2990.3460.147-0.233-0.1280.249-0.7180.2300.14220141.121-0.1370.2380.069-0.23-0.480.5970.2980.1190.11220150.009-0.0340.102-0.089-0.211-0.1780.118-0.3390.3890.0762016-0.0150.0101-0.702-0.2460.272-0.2890.079-0.3870.5020.1412017-0.064-0.0970.161-0.303-0.2080.147-0.2890.4780.1110.1142018-0.301-0.502-0.261-0.658-0.3010.1080.103-0.1870.4030.0982019-0.268-0.587-0.362-0.1530.698-0.3540.089-0.0620.4230.0982020-0.355-0.729-0.587-0.716-0.471-0.3870.1470.0380.4180.1152021-0.258-0.214-0.235-0.254-0.325-0.124-0.1480.2210.1480.185


## 4.2. Analysis of the Comparative Advantage of Resource-Intensive Products

The analysis in Figure1 shows that resource-intensive products had a clear comparative advantage in China in the 1990s, with SITC0 and SITC2 both having an index of revealed symmetric comparative advantage greater than 0 between 2013 and 2021 and SITC3 also having an index of revealed symmetric comparative advantage greater than 0 between 2013 and 2015. However, SITC1 and SITC4 did not have a comparative advantage, as they always had a negative value for the displayed symmetrical comparative advantage. In the long-term, the RSCA index for resource-intensive products as a whole tends to decline [26, 27].Figure 1
Indices of demonstrated symmetric comparative advantage for resource-intensive products (2013-2021).After 1996, the RSCA value for all intensive products falls below 0, and even after 2021, the index falls below -0.5 (except for SITC0, i.e., foodstuffs and products mainly for food or animals), indicating an increasing comparative disadvantage for SITC01, SITC2, and SITC3.


## 4.3. Analysis of the Comparative Advantage of Capital and Technology-Intensive Products

The trend of SITC5 (chemicals and related products) and SITC7 (machinery and transport equipment), which are capital- and technology-intensive products in our country, is very different, as seen in Figure2. In terms of year-on-year change, the RSCA index for SITC5 has remained around -0.2 between 2013 and 2021, but in the last 10 years, the RSCA index for SITC5 has fallen to -0.4, indicating that its comparative disadvantage has been increasing year on year. In contrast, SITC7 (machinery and transport equipment) was at a comparative disadvantage until 2013, when its index of revealed symmetrical comparative advantage was always less than 0. However, the change in the index shows an upward trend over the past decade from -0.862 to 0.075, and the RSCA index changed from negative to positive from 2013 onwards. The comparative advantage of SITC7 has been growing rapidly over the last decade.Figure 2
Index of demonstrated symmetric comparative advantage for capital- and technology-intensive products.


## 4.4. Analysis of the Comparative Advantage of Labor-Intensive Products

In China, labor-intensive products have long been the traditional export products in which we have a comparative advantage in the international market. It is clear from Figure3 that the RSCA indices for manufactured goods (SITC6) and miscellaneous goods (SITC8), both classified by material, have been above zero over the past 20 years, which fully demonstrates the clear advantage of our labor-intensive products in the international market. In contrast to SITC6, where the RSCA index varies steadily from year to year around 0.1, the RSCA index for SITC8 miscellaneous products has reached 0.4 since 2013, indicating a significant comparative advantage in the international market. This is in line with the basic economic situation in China, where the traditional export commodities are labor-intensive products, such as clothing and clothing accessories, shoes, and leather products, which account for a large proportion of total exports.Figure 3
Indices of comparative advantage for labor-intensive products showing symmetry.From the analysis of the data presented in Table1, it can be seen that since the mid-1990s, comparative advantage has been transformed into comparative disadvantage, and the disadvantage has been increasing year by year, concentrating on resource-intensive products in China. The value of SITC0 has reached below -0.3. At the same time, the share of primary products in China’s total exports has also changed considerably. From the performance figures of each stage, the share of primary products in 2000 was 47% on average, but this figure has dropped to 28% by 2021, and even to less than 6% in 2008, proving that primary products are no longer the core products of China’s exports.


## 4.5. Analysis of the Results of the Calculation of the National Export Comparative Advantage Index

The index is calculated between (-1, 1), and the comparison of the results shows that the comparative advantage of the country’s exports in the current period is greater as the value increases.China’s import and export trade has been in a continuous trade surplus since the 1990s, with imports much higher than exports. This trade situation can be clearly seen in Figure4, where the country’s export comparative advantage index is above zero in all years from 2013 to 2021, and in general, China’s exports have a clear comparative advantage and are more competitive.Figure 4
Country export comparative advantage index.The CRSCA index shows a significant increase from 0.07 to 0.14; the new round of CRSCA index decline started in 2013, and the competitive advantage of China’s export products gradually disappeared as the index declined; in the decade after China’s accession to the WTO, in the decade after China’s accession to the WTO, China’s national export comparative advantage index began to rise again, indicating that China’s export products have regained their competitiveness and comparative advantage in the international market.Although the relative prices of China’s exports have increased as a result of the reduction of tariffs, the further opening of markets, and the appreciation of the local currency, the export advantage has not been affected, indicating that external factors have had less impact on the exports of China’s products.The above analysis shows that after eight years of rapid economic development in the 1980s, the structure of China’s export products was optimized, with resource-intensive products in particular transforming into labor- and capital- and technology-intensive products. Labor-intensive products, China’s traditional export products, have always maintained a strong competitive advantage in the international market, but in the last decade or so, capital- and technology-intensive products have also begun to emerge. In 2021, China’s top five trading partners are ASEAN, the European Union, the United States, Japan, and South Korea. In the same period, China’s import and export to countries along the “the Belt and Road” reached a historical high. On the whole, the competitiveness and comparative advantage of China’s export products in the international market is still relatively significant.


## 5. Conclusions

To quantify the structural level of China’s cultural and creative product exports, the export sophistication of China’s cultural and creative products is increasing year by year but still ranks low compared to the international average and is at a low to medium level in the international market. The export basket is mainly composed of design products and handicrafts with low productivity levels, while the foreign trade volume of audiovisual products, performing arts, publications, and visual arts with higher productivity levels is low. This paper proposes that China should vigorously develop its cultural and creative industries, improve quality and efficiency while increasing scale, attach importance to the government’s planning and guiding role at the macro level, increase investment in scientific research, enhance the technical and cultural content of cultural and creative products, and improve the export sophistication as well as international competitiveness of cultural and creative products.



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