Empirical Analysis Of The Quality Of Chinese Exports

Exports have played a very important role in the economy development of China since the reform and opening to the outside world in China. However, with the increase in export, the exporters from China compete with each other in low price and faced a lot of restrictive trade policy in the international market. Export of China will be affected more when met with changes in the international market. The quality of export is being paid more and more attention because China will export more goods if the quality of goods is improved from the long run.Researches about the quality of China's export are less found. So this dissertation attempts to analyze the development of quality of China's export and the causes of paradox of China's export quality, which is favorable for fast, healthy and sustainable development of China's export.The dissertation consists of seven parts. Introduction shows the research back ground, consideration, structure and the contributions of the study. Chapter 2 outlines the related literature in both theoretical and empirical perspectives from the point of quality and international trade, quality and economic growth, quality and FDI respectively. Chapter 3 analyzes the quality of export of China on the product level of Unit Value and on the export volume level of different quality. Meanwhile this part compares the situation of high quality, medium quality and low quality exports of China with other countries dividing the products into different range according to the technology standard. Chapter 4 calculates the export quality index of China's 239 SITC 3 digit industries using EKS multilateral price index and based on the quality index of industries we can obtain quality index on different levels. On the base of Chapter 4, Chapter 5 compares the quality index across countries, which are divided into 4 groups: emerging economy countries, ASEAN countries, EU countries and other important countries. Chapter 6 puts forward the paradox of China's export quality and explains it from the view of international production fragmentation and FDI. Chapter 7 concludes the dissertation and discusses the policy implication. The major conclusions achieved in this dissertation are as follows.Firstly, the quality of China's export is experiencing a downward tendency on both industrial and total level from different perspectives. The quality of manufactured products which take a larger share of China's export is lower than that of primary products. Low quality goods take the most part of high technology products, the quality of which is the lowest and decreases fast. So the increase of export of high technology products is not beneficial to the improvement of China's export quality. The rapid growth of China's export mainly depends on low price, low quality rather than quality improvement.Secondly, there is a large difference between China's export quality and world average quality level, and the difference is being enlarged. The situation varies with the development stage of reference country when compare quality across countries. For the quality of manufactured products, quality of China's export is lower than developed countries and close to emerging economy and ASEAN countries. The only exception is Mexico, whose quality is lower than China's quality. The quality gap between China and other countries is sort of large for high and low technology products, but is lower for medium technology products.Thirdly, quality will increase with the increase of per capita income. The dissertation gets the same conclusion using panel data of per capita GDP and quality for 59 countries from 1995 to 2004. However, we get opposite conclusion using data of China, so paradox of China's export quality comes out.Fourthly, taking part in international production fragmentation can be an explanation of paradox of China's export quality. The quality of China's products is decreasing with the development of international production fragmentation from both components trade and vertical specialization perspectives. The processing trade, which is part and parcel in China's foreign trade, is mainly about OEM of low technology and low value added and locates on the low end of production chain. Instead of improve the quality of China's export, processing trade reinforces the fact of low quality of China's export and leads to the paradox of China's export quality.Fifthly, FDI can be another explanation of paradox of China's export quality. For some labor intensive industries, which have high FDI proportion, products have the feature of low price and low quality. On the other hand, for new high-tech industries, FDI dose not improve the quality, because the objective of FDI is the cheap labor in China. They process products in China and reexport to other countries. The large amount FDI in China do promote low quality export of China, but do little positive to the quality of China's export.