An Empirical Analysis Of The Determinants Of China's Intra-Industry Trade And Relevant Policy Suggestions

As a new trade pattern appearing after the 1950's, intra-industry means highly developed economy and foreign trade of a country. It does not only take an important role in today's international trade, but also will take a leading role in the future. In the 1980's, along with China's opening to the world intra-industry in China attracted more and more attention. Now intra-industry has taken a leading role in many of China's industries. Therefore, it is necessary to conduct an empirical analysis and evaluate the determinants of China's intra-industry trade. The thesis first is to conclude the determinants of intra-industry in terms of theory and its realistic development. Then it examines China's intra-industry development in details and conducts a weighted regression analysis using the cross section data of China. The explanatory variables include scale economy, product diversity, imperfect competitive market, foreign direct investment and capital-labor ratio. The results show that except scale economy has no obvious contribution to the intra-industry index, the other variables are highly related with China's intra-industry. The empirical analysis shows that big enterprises and foreign direct investment contribute significantly to China's intra-industry and the product diversity is positively related with intra-industry. However, labor, as China's competitive advantage, still contributes to the intra-industry and makes China mainly involved in horizontal intra-industry. Finally, based on the empirical analysis the thesis puts forward some suggestions for developing China's intra-industry in the future.