The Impact Of Processing Trade On The Export Of Machinery And Electronic Products

Processing trade developed rapidly in recent years. By now it has account for half of foreigntrade of China, while machinery and electronic products are the leading export products ofChina. This paper mainly discuss how Processing trade can boost export of machinery andelectronic products, and what measures we should take to develop processing trade: on the onehand, Our Enterprises should make innovation independently to get the key technology. On theother hand, we should establish or purchase brands and oversea distribution channel for ourproducts, extend the industrial chain from processing to R&D and distribution which has moreappended value. Only by these methods, we can prevail in the fierce competition.This paper is made of five sections. The first section introduces the relative definition andtheory: the definition of processing trade in both broad and narrow sense and the theory ofDouble-shortage. The second section analyzes the status and development of machinery andelectronic industry and processing trade in China. In the third section, we discuss the impact ofprocessing trade on the export of machinery and electronic products, and we argue thisthrough the aspects of capital, market and technology: Processing trade bring substantiveforeign investments, bigger market and more advanced technology. In the fourth section, someproblems we have encountered during the development of processing trade are highlighted:The foreign side takes control of key technologies and distribution channel;the R&D ofChinese enterprises didn't keep up with the development of processing trade;Chinesecompany can't attract talents of foreign company. To deal these problems, the last sectionbrings forward countermeasures from five aspects: scientific research mechanism, humanresource mechanism, brand strategy, extension of value chain and the measures governmentshould taken.