Export Trade In The Market Distortions Under The Conditions Of Excessive Competition "immiserizing Growth" Trap

With about thirty years of reform and open up, the economy of China developed rapidly.The foreign trade obtained the development with high speed, especially export trade, the scale and speed go up highly, which is attributed to the national economy. In 2004, China become the third largest trade country beyond Japan. From 2002 to 2006, Chinese export trade had been increasing at the speed of above 20% in the past five years, which brought high pressure to China and led to lots of trade frictions.Because of the existence of market distortion, Chinese economy does not enjoy completely the benefit of the welfare increase arising from the export trade high-speedy increase,and there exist many problems, such as excessive competition and low-price sales, the low structure of export goods, the high concentration of export markets etc.. The series of problems lead to low benefit with the high rise of export trade.The paper analyses the excessive competition of export trade and the"immiserizing growth"trap by use of distortion theory, excessive competition theory and"immiserizing growth"theory based on the anxiety about the export trade benefit. The paper analyses the present of export trade rise and terms of trade, gets the judgement in terms of national benefit criterion: China is facing to the trap of"immiserizing growth". The terms of trade of China present the characteristics: NBTT (net barter terms of trade) deteriorates, ITT (income terms of trade) improves formally, but impossibly deteriorates virtually, and FTT (factor terms of trade) deteriorates.NBTT presents the tendency of deterioration because of export price index decreases and import price index increases. The deterioration of NBTT manifests the loss of national benefit, and the amelioration of ITT derives from the high increase of the quantity. It can be seen through the analysis of the structure of export trade that the finished products account for majority proportion, but low added-valued low technical and labor-intensive finished products account for most of export goods, which lead to the low benefit of export trade. Because of the demand elasticity of low added-valued finished products is small, and the market demand tends to go down, so the space of ITT amelioration pushed by the quantity of export trade rise is limit. If the incremental benefit from ITT amelioration can not offset the loss of benefit from NBTT deterioration, the genuine"immiserizing growth"will appear.The formation mechanism of"immiserizing growth"trap is studied: the market distortion leads to the excessive competition of export industry, and the market distortion and excessive competition lead to the low-price sales, and the low-price sales directly lead to the deterioration of terms of trade, furtherly which will lead to be in face of"immiserizing growth"trap. The market distortion is macroscopic formation mechanism of"immiserizing growth"trap. As a large trade country in the course of the economy transformation, the distortion of China presents distinctive, and especially the distortion related with the economy system transformation is different from the market economy. The distortion is divided into three kinds, one is endogenous distortion, one is policy-imposed distortion, and one is system distortion during economy transformation. The endogenous distortion is unavoidable, for instance, the market distortion related with the market mechanism; the policy-imposed distortion should try to avoid, because it will lead to price distortion and a serial of distortion; the system distortion is the most difficult to remove, and it must reform deep the system.The excessive competition is middlescopic formation mechanism of"immiserizing growth"trap. The market distortion not only leads directly to"immiserizing growth"trap, but also may leads indirectly to"immiserizing growth"trap through the excessive competition led by distortion. The export excessive competition is attributed to the endogenous distortion, and mostly is from the policy-imposed distortion and system distortion. The low-price sales of export enterprises are microcosmic formation mechanism of"immiserizing growth"trap.The behavior of low-prices sales leads to the deterioration of terms of trade and the loss of national benefit, finally leads to be in face of the"immiserizing growth"trap.The market distortion is the root cause of China's export trade"immiserizing growth", so eliminating distortion is the key of avoiding"immiserizing growth". The principle of direct pertinence is the primary one of eliminating distortion. Adjusting properly the trade development strategy, transferring the increase mode of foreign trade, fostering the market system from excessive competition to efficient competition, adjusting the encouraging trade policy from export encouragement to export management, are effective measures of China's export trade walking out the trap of"immiserizing growth".