Research On The Role Of Import In China 's Trade Strategy

After years of implementing opening-up and reform policy, China achieves a fast track of development by taking advantage of economic globalization, new technological revolution and international industry relocation. Through more than 30 years in the past, China adopted a "FDI in-Export up-Development" model, with MNC as the vehicle, clustering foreign advanced factors within China. In the main time, the integration of foreign advanced factors with domestic low-level factors make it possible to undertake international production in a large scale, which, in turn, resulted in an extraordinary development of processing trade and laid the foundation of a trading giant. Despite the success story characterized by factor clustering in China, the fragility and limitation of this development model was reflected after the burst of financial crisis and new changes of international division of labor system and global production network. Especially, many problems arise such as the trap in the low-level global value chain faced by Chinese enterprises, the lacking in dynamics for industrial upgrading, intensified international competition and trade protection challenges. Presently, the transition from a trading giant to a competitive trading power should focus on the opportunities offered by new round of technological and industrial revolution as well as utilizing various resources gained through the years, especially the channel of import, in order to facilitate the transition from factor clustering and delivering to factor fostering, to support the upgrading along the global value chain, to foster the emerging industry and industrial upgrading, to achieve a factor-collaborating model of international specialization and the goal of a competitive trading power.The focus of international trade study has long been laid on export, ignoring the role played by import in technological progress and economic development. The export and net export is also very much recognized in evaluating trade’s contribution to development while taking import only as a leak and negative factor. However, an overall understanding of the trade theory suggests that the export is one way to earn foreign income according to comparative advantage theory. The actual realization of the trade benefits is to import resources and factors needed in order to improve the domestic productivity and economic development. After a literature review of import, it suggests that the classical trade theory argues that import trade can bring products which the country does not have an advantage in. The release of the labor from this production can focus on those productions which the country has higher efficiency in. This enhanced resource allocation would improve the economy. The new trade theory, endogenous growth model and heterogeneous enterprise trade theory introduce technology as an endogenous variable to analyze the interplay between technological progress, import and economic growth, making it possible to quantify dynamic gains of trade. Foreign R&D can foster the domestic technological progress through import as a key channel for international spillovers. There are several mechanisms through which import play its role such as the addition of factor supply, technological progress and industrial structure upgrading. However, the results of these mechanisms are affected by factors of import penetration rate, human capital capacity, trade freedom degree, education, regulation and economic stage.This dissertation, on the basis of literature review and the law of transition from comparative advantage to competitive advantage, considering the essence of trading power strategy, adopts comprehensive methods such as normative analysis, empirical study, model deduction and international case study in order to shed some light on the role of import from different perspectives, namely the fundamental role of imported capital goods, the building effect of imported intermediate inputs, the pro-competitive effect of import competition, the fostering effect of imported consumption goods, the boosting role played by import for export and the updating effect of technology import. More weights in analysis have been given to economic development rather than economic growth. Higher factor return, industrial upgrading and climbing up the global value chain corresponds different levels of targets within China’s trading power strategy.China’s economy steps into a stage called "New Normal", which is identified by the transition from high speed to moderate speed of economic growth, the transition from a development model focusing on scale and speed to quality and efficiency, the transition from capacity enhancing to structure optimizing and the transition from traditional growth point to new growth point. In this "New Normal" stage, it is of great importance to identify the role played by import in order to facilitate the transition from a trading giant to a trading power and implementing a balanced trade development policy.