Vertical Specialization And Sino-U.S. Bilateral Trade

In economics, there has been existed to economic interdependence. Such as the United States and China. Because of the richest labor resources endowment, china talked part in the international labor division, carried out the policy of export-oriented trade, gained enormous benefits of trade and accumulated a huge trade surplus. These foreign exchange reserves lend to United States. Trade in goods take account of the trade view, as an export destination for China, the United States accounted for nearly 20%, if added the re-export trade in Hong Kong, the United States market accounted for more than 30% of the total export. The United States provide the market and the trade surplus to china and china provide the funds to the unite states, the development of such an imbalance, that is, the continuity of the imbalance, the academic has two views:sustainable and unsustainable.Tithe situation of Sino-US economic symbiosis is sustainable? To answer this question, it should be considered from two aspects:whether the Chinese continue to maintain trade surplus from the United States and China continue to provide financial support for United States,Whether or not provide of financial support depends on the Chinese continue to maintain a trade surplus from the United States. If Sino-US trade is balanced, it does not require Chinese to buy a large number of American bonds, the United States there will be not borrowing funds for the purchase of the Chinese products. If Sino-US trade imbalance is continuing, the economic symbiosis between the two countries will continue.To analysis the development trend of Sino-US trade imbalance, first of all know about the reasons of the trade imbalance. Theorists have been exploring the causes of Sino-US trade imbalance, including the statistical differences, the RMB exchange rate and the United States export controls, and so on. The RMB exchange rate is the focus of the discussion, but the appreciation of the RMB didn't reduce the trade surplus, but a greater increase. From the industrial transfer thinking about the reasons of the Sino-US trade imbalance, the academic opinion has been reached a consensus that with the international labor division development, in order to reduce costs, the industries in developed countries and regions continuous transfer, allocation the resources around the world, because of Chinese open trade policies and low labor costs, following the international industrial shift, resulted in the expansion of Chinese exports. Not only export scale, China's export structure has changed greatly. The final assembly of manufactured goods is often relatively labor-intensive technology in the characteristics of property. Rely on China's labor resources endowments, more concentrated in the processing aspect. The factor endowments and comparative advantages determined the United States more focused on the core components of production, or quit from the manufactured goods which basic technology is relatively sophisticated production process. Because of the final product exported to the United States, not only contain the added value aspect in China, but also the added value which imports the parts and intermediate products in other countries, so China's trade surplus with the United States is contain other countries surplus transferred.Although view from the appearance, the trade deficit of the United States was mainly from China, how much was obtained by Chinese? This needs to measure the source of imbalance in the base of country and product, so we can know the relationship between vertical specialization and the Sino-US trade imbalance, and accordance to the changes of influencing factors for the vertical specialization, analysis the sustainable of the Sino-US trade imbalance. The overall objective of this study is on the basis of measuring the extent of Chinese vertical specialization used new calculation method, test the relationship of Sino-US trade imbalance and vertical specialization from the theory and empirical, according to the changes of impact for the vertical specialization analysis the sustainability of the Sino-U.S.trade imbalance, and finally proposed to policy recommendations to change the trade imbalance.Part 1:The specialization degree of Chinese exports to the United States was test. On the basis of existing research methods, this part develop a new measure of vertical specialization, this method can be more precise calculation the ratio of the intermediate products in the export products. Take advantage of this method, combined with Chinese input-output tables and separation trade data, the study calculated the extent of vertical specialization which Chinese exports to the United States, the results show that vertical specialization of exports to the United States have a very high degree, geographical decomposition results show that VSI from the United States is very low degree, but have a rather high degree from the East Asian region. These show that vertical specialization caused the trade imbalance.Part 2:The empirical research of the relation between vertical specialization and Sino-US trade imbalance. The major research work in this part is to use VSI results, in accordance with the framework of theoretical analysis, test the relations between vertical specialization and Sino-US trade imbalance. Test is divided into three levels:the vertical specialization to United States, vertical specialization with United States, vertical specialization with East Asia, to verify the three hypotheses.the hypotheses have been put forward just as follows:Hypothesis 1:With the extent improving of China's participation in the international division of labor and the upgrading of domestic production capacity, the vertical specialization extent of China exports to the United States experienced the process from the improve at first to the reduction. Vertical specialization has led to Sino-U.S.trade imbalance;Hypothesis 2:T Although the vertical specialization extent of china export to he United States is very high, the intermediate imports from the United States is smaller, that is to say the impact of the vertical specialization from the United States to the Sino-US trade imbalance is very small;Hypothesis 3:The vertical specialization from East Asia led to the Sino-U.S trade imbalance.Part 3:the development trend of Sino-US trade imbalance. This section first analyzes the factors impact of vertical specialization, FDI has significant led to vertical specialization. Because of Chinese FDI inflow is mainly cost-driven, with the rising of labor costs and other cost, the vertical type of FDI continued to decline. Also vertical specialization does not significant result in spillover effects, but domestic-funded enterprises have been crowding-out effect in technological progress, the proportion of the FDI inflows in the manufacturing sector continue to decrease,Sino-US trade imbalance will trend to balance; Finally, according to the case of South-East Asia Country,know the development direction of trade imbalances caused by vertical specialization.Although the Sino-US trade imbalance will towards a trade balance,because of the world financial crisis, the trade protectionism will be rising; China-US trade friction will increase. In the short term China should increase import the intermediate products from United States, and actively carry out an export-oriented direct investment, thereby reducing trade friction. The long-term China should improve independent innovation capability of domestic; enhance the added domestic value of exports. In addition the expanse domestic demand and reduce dependence on external markets.