Research On China’s Trade Openness And Economic Growth

Foreign trade is an important way to participate in international cooperation and competition, and is also one of the core of China’s opening up. Since the reform and opening up, China deeply involves in the process of economic globalization. The merchandise trade expands from $ 20.6 billion in 1978 to $ 4.303 trillion in 2014, and the average annual rate is about 16%;the commercial services trade expands from $ 4.4 billion in 1982 to $ 568.3 billion in 2014, and the average annual rate is about 14.6%. At present, China has become the world’s largest merchandise trade nation, and the third largest commercial services trade nation. The rapid growth of foreign trade provides China’s economic and social development with powerful force and vitality, and also enhances China’s international competitiveness and international influence.This thesis focuses on trade openness, and has two parts, one is the evaluation of China’s trade openness, the other is the relationship between trade openness and economic growth. The first part evaluates and analyses China’s trade openness, from the institutional level and the actual operating level, especially uses the value added trade data to measure the actual openness of China. The second part builds a macroeconomic model, and using the model, analyses the economic growth by raising trade openness. At the same time, using the non-competitive input-output model, analyses the export and import contribution to economic growth. At the end of paper, put forward the path to enhance trade openness and promote economic growth.The thesis is divided into eight chapters. Chapter 1 introduces the background and meaning of thesis topic, including summary of current studies, and the context as well. Chapter 2 emphases on the measure of trade openness from the institutional level, based on the WTO framework and the regional trade arrangement. Chapter 3 uses the WTO&OECD value added data to measure the actual level of trade openness for China and the world major economies, and analyses the prominent characteristic of China’s trade openness. Chapter 4 emphases on the reasons for low openness quality, including low trade value added, weak comparative advantage, and higher proportion of processing trade. Chapter 5 builds a macroeconomic model, and uses macroeconomic model to simulate the change of major economic indicators when trade openness improves steadily in 2015-2020. Chapter 6 uses non-competitive input-output model, to measure of the export and import contribution to economic growth. Chapter 7 puts forward the path to enhance trade openness and promote economic growth. Chapter 8 introduces the conclusions of this thesis, and the improvement in the future.This thesis summarizes the analysis of previous studies, tries to do something meaningful in terms of the measure of trade openness and the relationship between trade openness and economic growth. There are some innovations in this thesis, in which shows below:1. This thesis builds a macroeconomic model, and uses macroeconomic model to analyse analyses the economic growth by raising trade openness. At present, the study on trade openness and economic growth mostly use single equation or panel data model, less use macroeconomic models. We put the trade openness into the macroeconomic model, and the result shows that the trade openness has effect on the economic growth.2. This thesis uses the value added trade data to measure the level of trade openness, and study the quality of trade openness under the global value chain. At present, the study on trade openness measure mostly use customs statistic trade data, less use value added trade data. The customs import and export statistic only reflects a country’s trade size, and does not accurately reflect the value the country really get. Using value added trade data, we can analyse the real level of trade openness.3. This thesis uses non-competitive input-output model, and analyses the export and import contribution to economic growth. At present, the study using non-competitive input-output model mostly is from macroeconomic perspective, less from industry and value added perspective. We try to do some research in this field, and study the development orientation of different industry trade.4. This thesis improves the method to calculate trade openness. In the national accounts, the construction belongs to the second industry; but in trade statistics, construction trade belongs to services. The current measure of trade openness mostly dose not make adjustment, and the results is not the real reflection of trade openness. This thesis tries to correct it.5. This thesis makes a system of trade openness measure, from the institutional level and the actual operating level, by using economics and econometrics, to evaluate the relationship between trade openness and economic growth. In particular, this thesis analyses the level of trade openness in the framework of regional trade arrangement, uses the value added trade data and macroeconomic model to measure the effect of trade openness.