Sino-us Manufactured Goods Industry, Trade And Distribution Of Benefits

Intra-industry trade has been accounting for quite an important position in world trade since 1970s last century. It has become a major force driving the development of a new type international division of labor, accelerating the development of emerging and dominant industries. Intra-industry trade is a decisive factor, which determines the overseas trade development of developed economies and exerts profound influences on the development of international trade engaged in by developing nations. China's sustainable and fast economic growth, optimization and upgrading of industrial structure in the context of trade liberalization are catching the eyes of the world. People witness the great changes taking place in the commodity structure of China's foreign trade. Machinery and electronic products have become the most important exports of the country, replacing the traditional position held by textiles and apparels. Meanwhile, factors such as rising income per capita, diversified trend of consumption demand, and continuous expansion of FDI in size and the like have continuously promoted the development of intra-industrial trade in China's manufactured exports and imports, resulting in the daily rising proportion of intra-industrial trade in the country's foreign trade, machinery and electronic appliance such as motors, integrated circuit, transformers, electronic printing circuit, electronic switches, to name some of them.During the last three decades of reform and opening up to the rest of the world, fundamental changes have taken place in China's internal and external economic environment. In the context of economic globalization, the great challenges facing China are the appreciation of RMB, soaring prices of raw materials, rising of labor cost, huge amount of trade imbalance between China and the USA. It is worthwhile for us to have specific study on Sino-US trade and gains from trade. The reason why intra-industry trade in manufactured goods of China and the US is chosen as the cutting edge is just due to the following: Firstly, China is a developing country with the greatest potential in the world today, whereas the US is a developed country with economic strength ranking at the top of the world list. Trade between these two countries are characterized by its complementarity. Secondly, along with the widespread of economic globalization, trade in manufactured goods has become a mainstream of China's exportation. Compared to primary products, more weight is carried by intra-industry trade in manufactured goods between China and the US. In the area of vertical division of labor system of global value chain, which is dominated by developed nations, the manufacturing function of China has been brought into full play, abiding by the principle of optimizing allocation of global resources in light of different production stages or divisibility of production operations and the comparative advantages enjoyed by individual nations. Thirdly, the unique trade benefits generated via intra-industry trade in manufactured good are totally different from the traditional trade gains in its basic connotation. And it is this difference that prompts us to discuss in details the way China should take in her participation in international trade with economic globalization as the platform so as to gain more trade benefits. Certainly that must be in compliance with China's characteristics.On the basis of internal and external economic conditions, this dissertation tries to apply the relevant theories covered in International Economics, Industrial Economics, and Management, taking the methodology of theoretical approaches and empirical analysis. The paper illustrates in theory the reasons of occurence and mechanism of intra-industry trade in manufactured goods between China and the USA, conducting research on intra-industry trade in manufactured goods and trade benefits gained by these two nations. This thesis consists of four parts:Part I, the status quo and theoretical explanation of intra-industry trade in manufactured goods between China and the USA. Partâ…¡, the foundation on which intra-industry trade in manufactured goods between China and the USA take shape. Part III, the source and distribution of gains from intra-industry trade in manufactured goods between China and the USA. Part IV, policy recommendations to increase the share of trade gains. Specifically, the paper is composed of 8 chapters:Introduction. On the basis of a general description of the research background and significance, this part introduces the basic research route and research methodology, main content, layout and a summary of main innovative arguments of the thesis, with combination of study on intra-industry trade both at home and abroad, the status quo of research on intra-industry trade based on FDI.Chapter 1, traditional theories and their development in the area of intra-industry trade. This Chapter discusses the theoretical models and method of measurement. Firstly, it seeks the sources from which theories have been developed, by a summary of evolution or a road-map. Secondly, it explains the two basic forms taken by traditional theories on intra-industry trade, namely, horizontal intra-industry trade model and vertical intra-industry trade model. Both models take final products as trade objects and products of same industry are thus simultaneously exported and imported among developed nations and among developed nations and developing ones.Thirdly, it points out that the theory of vertical intra-industry trade has already been expanded in scope in the area of trade between developed countries and LDCs. It shows that the implication of vertical intra-industry trade has expanded to the importation and exportation of parts and components, intermediate products or processing products produced via various working procedures or different production links within the same industry, with MNCs as carriers. It gives the summary of the methods of measuring intra-industry trade and argues that the basic method adopted by this thesis is G-L Index. In addition, GHM and Input-output Analysis are introduced to demonstrate the expansion of vertical intra-industry trade.Chapter 2, the development of intra-industry trade in manufactured goods between China and the USA. This chapter starts with the discussion of structural attributes of Sino-US trade in manufactured goods, and followed with a comparison of the development in intra-industry trade of labor-intensity, capital or technology-intensity between China and the USA, based on an analysis of the general development situation of China's intra-industry trade and the general development level of intra-industry trade in manufactured goods between these two nations. The paper argues that machinery and transport equipment are shown to be of higher intra-industry trade indexed and higher in the degree of vertication. This feature highlights the expanded form of vertical intra-industry trade in the context of globalization. In other terms, intra-industry trade in manufactured goods between China and the USA means the importation and exportation of parts and components, intermediate products or processing products in different working procedures or production links within the same industry.Chapter 3, micro foundation of intra-industry trade in manufactured goods between China and the USA. This chapter points out that micro foundation of intra-industry trade in manufactured goods between China and the USA lies in the difference in factor structure between these two nations, FDI made by the USA in China and development of processing trade between these two nations. The paper examines the impacts of FDI on intra-industry trade by application of theoretical models and economic data relevant to vertical investments made by the US in China. An empirical model is set up to illustrate the impacts of FDI on China's intra-industry trade. The development of China's processing trade based on FDI is highly complementary with that of intra-industry trade in manufactured goods between China and the USA. In addition, the paper conducts an empirical research on the foundation of intra-industry trade in manufactured goods between these two nations, taking the example of the development of processing trade in the city of Shanghai.Chapter 4, source and distribution of gains resulting from intra-industry trade between China and the USA. This chapter differentiates the intra-industry trade gains and traditional trade gains, added by a brief account of the basic situation of intra-industry trade in manufactured goods between China and the USA in the participation in the global value chain. The paper gives a detailed account of the fact that the trade gains originate in industrial added value, exclusivity of production factors and production control patterns employed by MNCs in the context of economic globalization. It is argued that in the division of global value chain dominated by MNCs, China is in a relatively unfavorable position in the distribution of trade gains. It can be seen that there is an asymmetric distribution of trade gains between China and the USA. This Chapter ends with an empirical analysis of tax revenue and renumeration gained by China and their determination in the vertical division of labor in terms of industrial value chain, by citing an example of personal computer industry. Chapter 5, factors affecting distribution of gains from trade between China and the USA. This Chapter focuses on five areas which exert impacts on the distribution of trade gains between China and the USA, based on the reality of China's international trade and international investment, foreign trade policy and policies regarding acquisition of foreign capital implemented over the past decades. The five areas cover distortion of domestic factor market, China's preferential inbound FDI policies, transfer price with the exclusivity of foreign capital and trade game between China and the USA.Chapter 6, policy recommendations on increasing trade gains of China's manufactured goods. Based on the discussion of Chapter 5, this Chapter lays an emphasis on the examination of policy recommendations for parties concerned on increasing China's share of trade gains. These include promoting and perfecting factor market, upgrading processing trade, transferring marginal industry overseas, adjusting trade and investment policies, drawing on the quotable experience from NIEs and so on.Chapter 7, findings and prospect for follow-up research. This Chapter brings to the major conclusion on the basis of analysis made by the previous six Chapters, and points out the deficiencies of the current research and suggests the direction toward which follow-up research can be conducted.