| Developing the upgrading of China’s economy is of vital importance to the reform deepening. Since the export is main engine of China’s development, it is crucial to understand the mechanism of China’s exporters’ transformation. The paper focuses on the export in the middle-part of China, analyzes the exporters’ transformation and upgrading behavior. Based on the extension of the trade theory and location theory which China’s characters have been incorporated, The paper uses the modern econometrics to reveal many factors which have compound effects on the exporters’ transformation.In theory, my paper heavily relies on the monopolistic competition model which China’s characters have been incorporated. I firstly analyze the nexus between the R&D cost and firms’ transformation. Then, I further reveal the nexus under an open economy and conclude with three testable predictions. (1) When the export cost is low, the exporters are less productive; (2) Given firms’ export, only productive exporters can transformation and upgrade; (3) Productive exporters hire more skilled labor and expense more R&D fees.In empirics, based on the firm-level big data, I reveal the factors which exert effects on the exporter’s transformation and upgrading behavior with the help of modern econometrics such as LSDV, fixed effect method etc. Then I compare the middle-part exporters’ behavior to the non-middle-part exporters’. I find a positive transformation and upgrading in both the middle-part exporters and the non-middle-part exporters, that is, more productive firms are likely to upgrade which contradicts the popular wisdom that thinks the less productive firms are more likely to upgrade. Meanwhile, the paper indicates many differences in the export margins and transformation behaviors between the middle-part exporters’ behavior and the non-middle-part exporters’ due to the discrepancy in trade costs and factor abundances.The paper has three features as follows. First, the paper analyzes the export transformation and upgrading from a micro-level perspective. Contrary to many existing papers which share a similar issue with our paper, the model and empirics of the paper focuses on the firms’ behavior instead of the industry’s. Since the firms is the real players in the export transformation and upgrading, the conclusions of my paper are more realistic.Second, the paper considers the two margins of export. Thanks to the most popular model, that is, the so-called new-new trade theory model, my paper analyzes the two margins of exporters which include the extensive margin(export or not) and the intensive margin (export over the overall sales). Since the export-oriented policy has been adopted from the opening reform, the research on the two margins of export may favor to the government to enact more tractable corresponding policies in order to promote the upgrading of export in the middle-part of China.The last but on the least, the paper construct many indicates to capture many respects of firms’ transformation and upgrading behavior. Specifically, my paper not only uses some traditional measures such as labor productivity, but also uses the R&D expenses, new product value and high-skilled labor numbers to analyze the firms all kinds of innovations. Further, I put the location factor into the analysis in order to compare the middle-part exporters’ behavior to the non-middle-part exporters’.Based on the theory and empirics, the paper concludes with some suggestive policies. (1) Promoting the export transformation and upgrading with the help of both the market and the government; (2) Establishing the market’s dominant status in the export transformation and upgrading in the middle-part of China; (3) Adjusting the export-oriented policy step by step; (4) Improving the laws and policies on the intellectual property protection.
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