Empirical Study On The Intra-industry Trade Of China

According to the data of World Trade Organization (WTO), 88 per cent of trade of North American Free Trade Areas (NAFTA) belongs to the intra-industry trade in 2004, and east of Asia has got to 72 per cent. The intra-industry trade has taken an important role in international trade. What is called Intra-industry Trade is comparative to lnter-industry Trade. It is an action that a country or an area imports and exports the same product at the same time. Traditional trade theory can not explain this phenomenon in reason, which pushes the innovation of international theory and further empirical study. The intra-industry trade is a crucial indicator to show the flexibility of market and international division of labor. In addition, intra-industry trade generally only leads to the flow of manufacture factor during the same industry. The regulation is mild and the cost is under inter-industry trade in evidence. China lies in east of Asia. She is not only a developing country but also the third biggest country in world trade. The opening to the outside world has been more than 20 years. China now faces a series of problems of economic structure transfer. So study of intra-industry trade in China is important not only in its theory value but also its realism value.Scholars study this area from two types of characteristics-county and industry characteristics-are tested. Comparatively, the study of China lags behind. Most of research is based on indicator.Hu& Ma (1999) empirically studies the influence factors using the data in 1995. Ma Jianfei (2002) and Chen Xun (2004) only use industry characteristics to research. Shi Zhiyu (2003) is involved in country characteristics, but he just uses one indicator-national income to study.According to this, this paper uses Grubel-Lloyd (GL) to analyze the intra-industry and main characters in China. We compare and summarize the determinants of intra-industry trade about country characteristics arid its new advance, and analyze them in theory. Based on this, this paper empirically studies the influence of country characteristics on China's intra-industry trade using data from UN Comtrade in order to probe whether intra-industry trade theory is of applicability in China. We are also in hope to make up the shortage in country characteristics study. In addition, most scholars do not mention the income per person has different impact in supply and demand, so the conclusion and expectation remain great gap. This paper differentiates the two sides and finds the conclusion is consistent with expectation.