Importance measurement of domestic and foreign firms in Chinese provinces: A multi-regional input-output table based on the double extension of geographic regions and firm ownerships

Liu, Fangke; Xing, Lizhi

doi:10.2478/jdis-2025-0041

Abstract

Purpose

The study evaluates the relative roles of Domestic-Funded Enterprises (DFEs) and Foreign-Funded Enterprises (FFEs) across Chinese provinces. It further examines how industrial structures differ by ownership at both regional and national scales. Drawing on these findings, the analysis traces the geographic shift of FFEs and offers evidence-based guidance for shaping foreign investment policy.

Design/methodology/approach

This study uses Inter-Country Input-Output (ICIO) and Inter-Region Input-Output (IRIO) tables to build two extended datasets: Ownership-Extended Inter-Country Input-Output (OE-ICIO) and Ownership-Extended Multi-Region Input-Output (OE-IRIO) tables. These are then combined to construct the Regionally-Ownership Dually-Extended Multi-Regional Input-Output (RODE-MRIO) table and Global Domestic and Foreign Enterprises Network (GDFEN) model to explore the industrial relocation trends of FFEs in China.

Findings

The results indicate that: (1) From 2010 to 2019, FFEs in China showed an overall decline in influence, profitability, and network robustness. (2) Eastern and developed regions saw a clear retreat of FFEs, with a shift toward domestic control. Central regions and more developed regions played a transitional role. Moreover, western and less developed regions remained stable but still relied on low-end and resource-based activities. (3) FFEs’ influence has been gradually shifting towards less-developed central and western provinces due to rising labor costs and stricter environmental regulations.

Research limitations

First, only general policy recommendations are proposed, without exploring the design of specific policy instruments. Second, the significant impact of recent trade measures on the behavior of FFEs has not been considered. Third, further research is needed to deepen the analysis by comparing regional ownership dynamics in China with those in other major economies.

Practical implications

This research provides valuable insights for policymakers aiming to enhance regional economic development and improve China’s position within Global Value Chains (GVCs).

Originality/value

The originality of this paper lies in its development of a new model that combines geographic, sectoral, and ownership dimensions. This model allows for a clearer analysis of the roles of foreign and DFEs in China’s regional economy. It offers insights into industrial transfer trends within global value chains and provides a framework for analyzing and forecasting future shifts.

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