Abstract: In the real world, the impact of the widely existed contractual incompleteness on the intra-product international division and the resulting distribution pattern of trade profits is active and far-reaching. On the basis of Antras and Chor (2013) and from the perspective of the intermediate suppliers of the developing countries, this paper puts forward a theoretical hypothesis of how to achieve the distribution maximization of the trade gains in the value chain, and then it employs the transnational panel data to conduct an empirical test on the relative theoretical hypothesis. The findings show that: (1) for the production networks in the alternative value chain, the embedding of China’s manufacturing industry close to the upstream position in the global value chain is conductive to the improvement of trade gains; (2) the efficiency of contract enforcement in different regions and the contract intensity in different industries have a significant interactive effect on the distribution pattern of trade profits in China’s manufacturing industries; (3) compared with the complementary type, in the production network of the alternative value chain, the position of industry global value chain has a more significantly positive impact on the real trade profits hidden in the final products.

Key words: contract incompleteness; value chain production network; trade gains