Trade heterogeneity and virtual water exports of China

China is facing serious water scarcity, and the effects of international trade on its water resources have been widely examined. Processing exports account for nearly half of China’s gross exports. Adopting China’s multi-regional input–output table that captures processing exports, we enrich the literature on virtual water exports by accounting for trade heterogeneity. The results show that China’s virtual water exports show a significant trade heterogeneity. Normal and processing exports are attributed to 86.7% and 13.3% of the Agriculture sector’s water use induced by exports respectively. Conversely, normal and processing exports are attributed to 31.8% and 68.3% of the Communications Equipment, Computers sector’s water use induced by exports respectively. In addition, a cross-regional compensation is needed to deal with the unequal regional distribution of water uses and economic benefits related to exports.