| Since the 1970's, the intra-industry trade between the developed countries has been developing quickly, which drew the research of the economists. The division between China and developed countries is mainly vertical, especially manufacturing industry, in which the intra-industry trade has only a small percent. However, it is important for improving the technology, updating the structure of production, raising the efficiency of business operation in manufacturing industry and other industries. So it is valuable to research intra-industry trade. According to the Standard International Trade Classification (SITC), the industry is gathering of those products that the first three digitals are the same according to SITC, i.e. they at least belong to the same division,chapter and group. The intra-industry trade is that the product is exported while imported at the same time by one country.The intra-industry trade can bring interests to both consumers and manufacturer. The consumers have more choices. New products can be sold quickly and reduce the cost of research and develop. The friction aroused by element transfer within industry is small. Intra-industry trade introduce developing countries into international division, so that their technology level can be improved.The theories of intra-industry trade change the unrealistic assumption of traditional theory. They assume the market is imperfect competition and the product is not homogeneity. They research from demand and require government intervene in order to enhance the scale economy and international competition ability. Linder's "demand similar theory" is that the intra-industry trade happens between countries whose economy is similar. Average revenue is similar, so there is a large amount of similar demand, which is the fundament of intra-industry trade. The economy in developing country develops more quickly, there is more similar demand with developed country.Vernon considers that the product has four phases: emerge, develop, mature and decline. Developed country has higher technology level, so they can produce high tech product, while developing country produces standardize products, because of low cost of labor. As the result, the same product in different phases can be dynamic intra-industry trade.Krugman proves by pattern that intra-industry trade occurred because of scale economy. The term is that when demand by domestic and foreign market is zero, the price is greater than every manufacturer's margin cost.Grubel-Lloyd index is often used to measure intra-industry trade. ×100. Bi ranges from 0 to 100, the smaller Bi is, the lower intra-industry trade is.The intra-industry trade in China has developed quickly. From 1992 to 2002, there are 51 industries of 62 industries, whose G-L index increases. Production structure becomes better and better. The positions of industries in which technology occupies more percent increase much. The majority of top 10 G-L index industries are high tech, such as mechanical and electrical product, chemistry, optics and medicine. Process trade that only depends on low labor cost decreases. The majority of last 10 G-L index industries are labor intensive or resource intensive products. Industry G-L index increased slowly is industry G-L index low. Those industries are labor intensive and resource intensive, with low attached value. They are low industry structure products with little technology content.Using industry competition index which is Ci=(Xi-Mi)/(Xi+Mi), and G-L index, we analyze intra-industry trade. If Ci>0, we consider the industry has competition ability, on the other hand, Ci<0,the industry has little competition ability. Our manufacture industries can be divided into four groups by this means. Group 1: Bi>50,Ci>0, the majority is textile, which can use our resource and labor preponderance. Group 2: Bi>50,Ci<0, they have high technology content. And their positions in international trade increase. But the export products always have low technology, while import products have hi...
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