Research On China Export Growth Transition Based On Dual Trade Margins

The transformation and upgrading of trade pattern is one of the important contents of trade theory. With the expansion of export scale, enhancing trade status and increasing degree of integration into the world economy, China export products’ opportunity costs continue to increase, and the transformation of the past kind of growth mode, that is extensive, needs to transform to intensive growth mode. Whether upgrade is successful is reflected in the relative position and elements’nature of the country to participate in the division of labor in the international division and its trade interests from trade.The new-new trade theory established by Melitz etc. (2003) introduces the ideas and methods of trade dual marginss, decomposing a country’s trade growth into the intensive margin and extensive margin. Using the method of trade dual marginss is important for understanding the trade patterns differences, the distinction between trade mechanism and evaluation of growth quality. Based on the new-new trade theory and research framework of trade dual marginss, and introducing the concept of quality margin, it is proposed in this paper that China’s export growth transition means that export growth comes from the extensive margin, price margin and quality margin, rather than quantitative margin.Using the modified Hummels and Klenow (2005) method of measuring trade dual margin, it analyses comprehensive status and effecting factors of the transformation of China’s export growth, not only from the overall export perspective but also from processing trade and ordinary trade classification perspective.The theoretical significance of the paper lies in that:it promotes the trade margin theory combined with the application in the study of China’s trade growth transition, and it introduces the concept of quality margin of trade growth and its measuring, in the current condition of intra-product specialization and trade, and it enriches and promotes the trade margin theory’s development, and it provides academic reference for relevant scholars to study China export growth transformation. The practical significance lies in that:firstly it helps to grasp the characteristics of China’s export growth and to understand of China’s export growth performance of transformation, so we can to develop appropriate trade policy. Secondly, from the perspective of trade dual margins decomposition, we can find out the main factors which restrict the China export growth transformation, especially the widely criticized for China’s low-priced export strategy, the researche emphasises the economics reasons behind and its important significance to success for trade transformation. The existing research on export growth transformation emphasis the importance of improving technological content of export products,rather this paper emphasizes that the successful export growth transition should rely more on extensive margin, price margin and quality margin, and the corresponding policy meaning not only to strengthen the independent innovation and technological progress, it is more important to enhance the position in global production networks and global value chain, and to get more market power in the international market.The paper is divided into seven chapters, and the first chapter is introduction. Based on the study of background and significance of the research, it explores related literatures about trade dual margins and transformation of trade growth.Then it explains the core concepts of this thesis, and it puts forward the core view, the research framework, methodologies, contributions and limitations of this paper.The second chapter, entitled as supporting theory:relationship between trade growth transformation and margins of trade growth. Based on the new-new trade theory, trade dual margins decomposing framework, and the classic Dixit-Stiglitz (1977)’s model, it establish the model of differential products trade volume under monopolistic competition, in which a country’s export growth is further decomposed into extensive margin, price margin and quality margin. Using trade theory, price theory and economics theory to analyze the economics mechanism of export growth transition that is, export growth should come from extensive margin, price margin and quality margin, rather from quantity margin.The third chapter is China export growth and its influencing factors. First of all, it studies the source of China export growth from the perspective of market share by using the modified CMS model, then based on the China’s position in East Asia production networks and triangular trade pattern, it analyses the main macroeconomic factors influencing China export growth by using export demand function.The fourth chapter is study on the changes of extensive margin and intensive margin of China export growth. Based on the modified Hummels and Klenow’s (2005) method of decomposing export growth, it examines China’s extensive margin and intensive margin respectively, classified by total trade, processing trade and ordinary trade. And in terms of trade cost it analyzes the effecting factors of China extensive margin and intensive margin. Finally, in the case of Sino-Japan political shocks it studies different economic effects on dual margins.The fifth chapter is China’s export price margin and its international division status. Firstly, it analizes price change trend of China export in recent years, and studies the low-price export phenomenon by using price theory, which reflects China products’ low-end position in international division position and lack of market power. Then it uses the relative price index to examine China’s specialization position in international division of labor. At last it uses market power model of the pass-through effect of exchange rate measuring Chinese products market power in the developed country’s market.The sixth chapter is quality margin of China export growth. It firstly studies the importance of export product quality, and explains the reasons for using industrial total factor productivity (TFP) as a measuring indicator of trade product quality. Secondly it discusses the contribution of the product quality to export growth by establishing an econometric model, meanwhile distinguishing contribution differences between different types of trade mode. The seventh chapter is main conclusions and policy recommendations. It gives a simple summary to the full text and puts forward the corresponding policy recommendations.The main research methods include:combining normative analysis with empirical analysis. In the study of each problem, it firstly proposes that what the opinions should be according to normative analysis, then uses empirical analysis to study what the facts is. For example, in the second chapter it builds the theoretical basis of economics theory for relationship between the transformation of trade growth and export growth margin, then it runs the empirical test in the third chapter and the fourth chapter respectively with the corresponding trade statistical data and econometric model; in the second chapter, it uses modern price theory to examine significance of price margin in China export growth transformation, then explores the status of the international division of labor and export products’market power in the fifth chapter by means of empirical data. Another method is to combine static analysis with dynamic analysis. This article uses comparative static analysis while decomposing the intensive margin and the extensive margin, also uses the panel data model to study the influencing factors of trade dual marginss based on dynamic background. The last method is to combine qualitative analysis with quantitative analysis. The former includes the use of economics theory to qualitatively examine issues of China’s trade growth transition, such as the performance of China’s trade growth transition and status in the international division of labor. The latter includes using a variety of statistical data to establish the corresponding economic indicators and measuring model, to reveal the inherent law of and effecting factors on China’s trade dual margins development.The contributions of this paper are as follows:firstly, based on the new-new trade theory and modern price theory, it constructs the theoretical framework of relationship between export growth transformation and export growth marginal conversion, decomposing export growth into extensive margin, price margin and quality margin, and proposes that China’s export growth transition is to achieve export growth comes from extensive margin, price margin and quality margin rather than from quantitative margin; secondly, it examines not only the total trade, and further the processing trade and ordinary trade to study the transformation of trade growth, which overcomes the defects that the existing literatures have. According to the results of this study, the processing trade and ordinary trade in effecting factors are of different characteristics, trends and the impact, which formulate the corresponding different policy; based on the decomposition of trade dual margins, it puts forward the method measuring quality margin of trade products, so as to enrich the existing literature. Currently the popular decomposing method of trade dual margins comes from Feenstra (1999), Hummels and Klenow (2005),and the Hummels and Klenow (2005)’s method itself has some inherent defects, which causes many country will overestimate the extensive margin, and this paper used the modified Hummels and Klenow (2005)’s method, which is rarely used in the current domestic literature.The limitations of this paper are as follows:firstly it is that due to the problem of data acquisition, main contents and conclusions of this paper are decomposed from the product-level data, and the conclusion may be different based on markets or enterprises level data otherwise. Secondly there is no consistent method about trade products quality measuring, using industrial total factor productivity to measure used in this paper may ignore the differences between different enterprises in productivity; Thirdly the issues on transformation of trade growth relates to various aspects of the indicators and comprehensive measuring, the analysis of trade dual margins only provides another dimension of analysis and it can not substitute for other measuring method.