Shortand long-term drivers of China’s high-tech export leadership: empirical analysis

It is widely acknowledged that the People’s Republic of China has emerged as a major player in the global arena of high-­technology product exports. In the preceding 15-year period, high-­tech exports have exhibited an average annual growth rate of 6%, though this trend is stochastic in nature. Consequently, the growth rate is not consistent but is acutely responsive to external shocks. The Granger causality test and the Engle — Granger cointegration test are utilised to identify the long-­run effects of the variables under consideration. The Error Correction Model (ECM) is employed to estimate the long-­run and short-­run response to changes in the main drivers. The results demonstrate that despite changes in economic policy and the launch of the Made in China 2025 programme a decade ago, the primary long-­term driver of export growth remains foreign capital. While expenditures on research and development (R&D) have shown a tendency to positively influence high-­tech exports in the short term, international investment, particularly in the form of foreign direct investment, has a more significant long-­term impact on high-­tech exports from China. In the short term, a decline in net foreign direct investment inflows is likely to be balanced by an increase in R&D. Nevertheless, in the long term, the impact of accumulated international investment proves to be considerably more significant. New Chinese policy priorities are expected to shift the main driver of high-­tech export growth from foreign capital to domestic R&D.