Empirical Study on the Intra-industry Trade Development of China

Abstract: The intra-industry trade is comparative to inter-industry trade. It is an action that a country or an area imports and exports the same product at the same time. Traditional trade theory can not explain this phenomenon ,which pushes the innovation of international theory and further empirical study.As a new theory of international trade, the intra-industry trade theory explains some new phenomenon after World War, which makes up of traditional international trade theory, and provides a theoretical basis for the development of the international trade. According to the pattern of trade the Intra-industry trade can be divided into vertical intra-industry trade and horizontal intra-industry trade. The vertical intra-industry trade can promote the development of industrial structure, and the horizontal intra-industry trade can form the economies of scale and raise the level of welfare. The intra-industry trade is a crucial indicator to show the flexibility of market and international division of labor. And the Intra-industry trade reduces the resistance of foreign trade protectionism.Looking at the history of China's foreign trade, in general, it is the use of the advantage of low labor cost, to develop the labor-intensive industries. This strategy for China's foreign trade improvement plays a very important role. However, with the change of the international economic situation and China's role in the international market, the drawback of such a strategy has also emerged: With the increase of tariff and non-tariff barriers affect China's foreign trade. Chinese exports are boycotted, especially labor-intensive products. It deteriorates our international trade relations. The intra-industry trade can hardly touched on trade opponents’sensitive international trade issues, so it will not cause a huge trade imbalance. Therefore, the intra-industry trade can improve China's external trade relations, and better development of their own best way.Therefore, the fully understanding of the intra-industry trade theory, the study of the intra-industry trade pattern of China, and the creation of a competitive advantage, have important significance for us. There are most of the empirical and theoretical researches on developed countries' situation, but less on developing countries like us. This paper sought to analyze the Chinese intra-industry trade situation and advise the government for the future road. Firstly, we introduce the development of intra-industry theory and analyze the Chinese intra-industry situation. Secondly, we take the agricultural industry and the electromechanical industry as an example, find that although agricultural products and electromechanical products have big differences, but the intra-industry trade indices have similar characteristics. Thirdly, we use empirical research to validate that different industries are subject to some factors like GDP,FDI,R&D ,scale economy etc. The thesis can be divided into following main part:The first Chapter conducts a literature review for the theoretical issues involved in this paper. The theoretical background mainly includes three aspects: the facing fundamental problems in research for intra-industry trade; the main causes for the arising of intra-industry trade; the empirical study for intra-industry trade at home and abroad.The second Chapter overviews the development of intra-industry trade. This paper firstly introduces the overall perspective of China's trade status within the industry ,then does the structural analysis for China's intra-industry trade from three points of view in industry classification、industrial structure classification and trade pattern classification. The study finds the intra-industry trade characteristics and the overall development characteristics for many industries in China.The third Chapter analyzes the impacting factors to China's industry trade and does the empirical study which choices the agricultural products and mechanical and electrical products as an example. Firstly, to discover the main factors which affect our country's trade development within the industry; Then by selecting the samples, building the model to verify the above analysis.The forth Chapter gives some policy recommendations for the development of China intra-industry trade basing on the above analysis. It is as follows: Improving the people's living standards, making the consumption structures better, promoting diversification needs for demand; Guiding foreign investment and optimizing the structures and promoting the healthy development of trade within the industry; Promoting the formation of scale economies and improving the competitiveness of Chinese enterprises; Increasing the investment for R & D and introducing advanced technology from foreign countries; Developing education vigorously and improving the quality of laborers; Making the Government play the guiding role adequately and making effort to build the free trade zone…
Key words: Aquatic Products; Export Trades; Strategic Choice