An Analysis On The Factors Influencing Transformation And Upgrading Of Processing Trade In China

With almost 30 years'development, China's processing trade has played a very important role in promoting economic growth, increasing employment, drawing foreign trade and so on. However, the processing trade also has many problems, they are as follows: low industrial linkage, poor technology spillover, dominated by the foreign-funded enterprises, lack of the core competitiveness of domestic enterprises, low technical level and value-added, unbalanced regional distribution and inefficient, relatively concentrated import and export markets, intensified trade frictions etc. Especially the eruption of financial crisis made the transformation and upgrading of processing trade necessary and urgent. Although China has proposed transformation and upgrading strategy of processing trade for six years, it failed to achieve its goal.Based on this background, the paper uses traditional comparative advantage theory, competitive advantage theory and value chain theory as its theoretical basis. And the paper puts emphasis on the factors which influence the transformation and upgrading of processing trade, mainly using the methods of theory with practice, qualitative and quantitative analysis combined. Based on that, the paper makes some policy proposals which are targeted on the promotion of transformation and upgrading of processing trade.First of all, the paper defines the relevant concepts, based on that, it makes an analysis on the transformation and upgrading of China's processing trade using three theories as referred before. Next, the paper points out the necessity and urgency of the transformation and upgrading of China's processing trade based on the present situation of China's processing trade and combining with the current international and domestic situation. Then, the paper specifies factors which are influencing basic theory and builds an analytical framework of factors which influencing transformation and upgrading of China's processing trade. On basis of that, the paper mainly studies on the influences of various factors towards the transformation and upgrading of processing trade from the policy level, the external environment and corporate level respectively. Moreover, the paper selects six factors as empirical analysis from framework for the purpose of finding out the constraints. Finally, the paper makes a conclusion and puts forward relevant policy proposals to promote transformation and upgrading of processing trade basing on the results of empirical analysis. According to the above analysis, the paper comes to the conclusion that the irrational domestic industrial structure, high degree of trade openness, backward technical level as well as deficient related and supporting industries are the main document constraints of transformation and upgrading of China's processing trade. So, it suggests that the government should take measures to promote transformation and upgrading of processing trade, such as differentiating and guiding the foreign direct investment, encouraging export enterprises domestic sale combined, fostering a core competitive enterprises going out, enhancing the introduction and cultivation of talents, inspiring independent innovation and adjusting the related policies of processing trade.