Journal article: We estimate the relationship between export sophistication and economic and export performance in China. We confirm Hausmann, Hwang and Rodrik (2007)'s prediction that regions that develop more sophisticated goods grasp greater gains from globalization and grow faster. We find that these gains are limited to export activities undertaken by domestic entities. Direct gains do not appear to derive from foreign entities typically engaged in processing trade even though they are the main contributors to the global upgrading of China's exports.