Tuscan manufacturing and the “world factory”: some evidence on trade relations between the regional production system and China

Interactions between the Tuscan and Chinese economies in terms of production have intensified in recent years. China’s entry into the WTO and the elimination of the Multifiber Agreement in the early 2000s helped shape the Asian giant’s role in the global economy, making it over time the “factory” of Western economies. The so-called “New Globalization,” the progressive geographical disaggregation of production into global value chains, is largely due to the rise of the Chinese economy between 2000 and the Great Recession. For Tuscany, like other advanced regional economies, this has led to growing competition in some traditional intermediate and final processing sectors. This competition significantly weakened the manufacturing sector’s momentum during the 2000s. At the same time, however, for those industries that continued to be based in the region, the ability to rely on the Chinese production system for the supply of some basic inputs represented an opportunity to increase their competitiveness on international markets by relocating the lower-value-added stages of the value chain.

In this brief note, we review the last twenty years of trade relations between our region and China, through a thoughtful analysis of data on imports and exports of goods from Italian regions.