The Macroeconomic Effects of Decoupling in the Information and Communication Technology Industry:A Perspective from Production Networks
Under US-China technological competition,China's ICT supply chain faces significant security challenges,which may pose potential risks to macroeconomic stability through industry interconnections.This paper constructs a multi-sector production network general equilibrium model to characterize the macroeconomic transmission effects of ICT productivity shocks.Our findings reveal that productivity shocks in the ICT sector influence the macroeconomy through technical effects driven by industry interconnections.Additionally,due to the ICT sector's critical position and low substitution elasticity within the production network,structural effects amplify negative productivity shocks'macroeconomic impact while dampening positive shocks,leading to asymmetric effects of sanctions and subsidies.Quantitatively,our input-output analysis shows a substitution elasticity for China's ICT sector markedly below 1,indicating substantial production complementarities.A 10％productivity shock in ICT yields a 2.08％first-order technical effect.Due to the low elasticity,a 10％negative shock results in a 2.14％macro impact,while a 10％positive shock yields a 2.02％impact.To offset adverse effects from US sanctions,China would require more substantial subsidies,with ICT sector subsidies being most effective,followed by upstream and then downstream industries.Our research highlights that ICT supply chain security is critical to macroeconomic stability,with ICT substitutability and digitalization in related industries as key factors in production network security and development.Policy recommendations include:First,we should prioritize ICT supply chain security by strengthening upstream technology and industry resilience.Second,we should counter sanctions with targeted strikes on segments with low substitution elasticity.Third,we should support ICT leaders in achieving critical technology breakthroughs and establishing backup mechanisms to enhance product substitutability.Fourth,as ICT subsidies are constrained by complementary input effects,we should focus on driving digital transformation,leveraging technology spillovers,and maximizing subsidy efficiency.This paper makes the following contributions:First,by analyzing low substitution elasticity in ICT through production network theory,it enriches research on ICT's macroeconomic impact.Second,it offers a novel perspective on ICT supply chain security through industry interconnection,advancing understanding of the"bottleneck"issue.Third,it quantitatively depicts the asymmetric macroeconomic effects of ICT productivity shocks from sanctions and subsidies,providing a theoretical basis for sound policy formulation.
production networkICT industryelasticity of substitutiontechnical effectstructural effect
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