Political Ecomomy Analysis Of Service Trade Protection In China

The failure of explanation of traditional trade theory towards trade protection promotes the birth of trade protection political economy. Trade protection political economy gets rid of the explanation basis on efficiency and introduces public choice theory into traditional trade theory.From the angle of revenue distribution,it explains the determination process of trade protection policy. Nowadays,service trade is prospering and trade protection is reviving.Under this condition, how to understanding the conflict between free trade proposed by traditional trade theory and trade protectionism is very important. How to evaluate the level of China’s service trade protection and how to understand the policy process can not be neglected. How to understand the influence factors of China’s service trade protection and find the balance of free trade and trade protection to promote service trade and service industry development is an meaningful study without delay.This paper reviews the past theories,revises the traditional political economy models on trade protection and then proposes China’s political economy model on service trade protection. Besides,this paper makes empirical test on main service industries between2001and2010. The main contributions of this paper are as follows:1.The thesis constructs a probit analysis method to measure service trade barrier.Combining with the characteristics of four supply patterns of service, the different position of service industries, the open degree and China’s commitment on agreement of service trade,we make probit analysis of12sectors,46branches and155subclasses in service trade.Finally, we compare the result with America which is the most developed country in service trade and then evaluates China’s trade protection level.2.Combining with characteristics of China’s decision-making process and service trade,the thesis analyzes the decision-making process of China’s service trade protection and its influencing factors in terms of game theory.Through the analysis,we know that the decision-making process is a game dominated by central government between various interest groups such as local governments,firms,consumers and foreign interest groups.The final political equilibrium is the result of compromise and balance between different interest groups.Of course,there are some other factors which central government mush pay attention to.That is economic development> industry planning and trade development strategy which can be reflected by influencing coefficient,response coefficient,competition index,productivity rate and capital intensity.3.The thesis constructs a political model on service trade protection,which fits China’s special national condition and characteristic of service industry.Basing on Gil model and combining with characteristic of China’s decision-making process in service industry, this model analyzes the process of trade protection in service FDI,which is the most important pattern of service supply.In this study,we introduce many influencing factors and build a government goal function.Through the derivation of goal function,we finally obtain the optimal policy which can maximize government’s welfare.4. We make empirical test on main service industries such as construction,wholesale and retail industry,catering and hotel industry,financial industry and real estate industry between2001and2010.Through the test,we get some important conclusions as follows.First,in the decision-making process of China’s service trade policy,consumers have much less influence compared to producers.As became an main difference between China and the western democracies.Second,as far as an individual firms are concerned,the bigger the firm scale is,the higher protection level it receives.In the point of different service industries,the higher industrial concentration is,the higher protection level it receives.Third,game between upstream and downstream firms makes the former get more protection than the lalter.In service outsourcing,contractors usually get less protection than contractees.Fourth,foreign interest groups have a impressive instead of invisible and marginal influence in the determination of China’s service trade policy.Finally,the influence of capital intensity and productivity can not be neglected.