LAUSR

China has shifted its focus from export-led growth to technology-driven growth. The “One Belt, One Road” initiative (OBOR) is aimed at promoting economic integration with the rest of the world that might boost China’s ability to upgrade its manufacturers. We evaluate the impact of the OBOR initiative on the manufacturing industries of China. In other words, we examine whether the greater openness entailed by the initiative has been a catalyst for upgrading China’s export portfolio. We demonstrate that the proposition has been such a catalyst formally and adduce some empirical support for the proposition by using a panel of the top 80 exporting countries in the world during the period from 2002–2017 to evaluate the impact of the economic integration brought by the OBOR in terms of upgrades to Chinese manufacturers. Meanwhile, when domestic R&D generates knowledge spillover, the benefits of greater openness become partly indeterminate, thus counterfactual analysis was adopted to preclude potential endogeneity. By relating the values of exports at the two-digit harmonized system level to data on sectors to conduct integration within global production networks, we find that the greater openness brought by the OBOR initiative has actively increased manufacturing complexity and facilitated industrial upgrading in China.