New International Division Of Labor, Global Production Networks And The Development Of China's Maunfacturing

Intra-product international specialization emerged in 1950's and gradually dominated the form of international production and trade. This new pattern of international division of labor brings the specialization based on the comparative advantages among countries from the product itself into its inner working procedures and processes. Global production networks strengthen the relationship among countries and generate essential effects on the development of members.Being a latecomer in the new system of international division of labor, China rapidly joined into global production networks through developing processing trade and attractiving foreign direct investment. China's industrial sectors have become the world factory, but some people suggest that China's manufacturing remains to be low level in fact. In the context of intra-product international specialization, this paper evaluated China's competitiveness and status from the perspective of global value chain. Then we discuss how to accept international outsourcing and upgrade according to the data and experience of developing countries.Based on the analysis of trade data, the findings reveal that China mainly plays the actor of processing workshop in the intra-product specialization. The exports of high-tech industries and high-tech products increase rapidly, but China's competitiveness in such area focuses on the labor-intensive production stages of low value-added. However, China has achieved the staggered goals of industry upgrading and technology upgrading. China's position in the international division of labor has also been improved on. In the course of falling into East Asian production networks, China is emerging into the production center of East Asia. Meanwhile, the competition effects of China's emergence have upgraded the specialization stages of members and the whole networks. Through China's cooperation, the internal relationships of East Asian production networks have become closer. Moreover, China evolves into the export platform of East Asia, which makes the pattern of East Asian production networks exporting to world market change from "bilateral trade" into "triangular trade".Base on a panel dataset over the period 1995-2006, we carry out an empirical investigation on the relationship between international intra-product specialization and productivity in Chinese manufacturing. The findings suggest that international intra-product specialization has promoted productivity growth from the aspects of imports and exports, while exports have made greater contribution to such growth. The effects of international intra-product specialization on technological upgrading appear in recent years and mainly from trade in parts and components. Export of intermediates drives technological progress from the effect of skilled-biased labor factor distribution. But import of intermediates accelerates technological upgrading depending on the effects of inputs channel and technology spillover.This paper carried out an empirical investigation to test the determinants of developing countries receiving international outsourcing. The findings reveal that both labor cost and transaction cost in developing countries have significant impacts on the firms' location choice. Outsourcing with low technology contents is more willing to choose a country with low wage to save labor cost, but one with high technology contents is more likely choose a country with better quality of service to save transaction cost. China has comparative advantage in most indicators of labor cost and transaction cost. Based on an empirical study on forty developing countries, we find that intra-product specialization has a significant positive effect on upgrading value chain. However, such effect is mainly from the contributions of high-level cooperation and needs to meet some preconditions such as human capital, service and institution. In the course of joining into the intra-product specialization, China has upgraded value chain obviously. Improvements on transport services and the policies biased on high-level specialization play the important roles.Finanlly, author sums up several main findings in the whole thesis. Based on in-depth analyzing the problems about China's joining into intra-product international specialization, this paper thinks about the strategies on industrial upgrading and propose some suggestion on how to develop China's manufacturing in global production networks.