Study On China's Export Product Quality Analysis And Its Influencing Factors

Since the reform and opening up, China's foreign trade is growing rapidly with the product structure upgrading. Even though, the products made in China are still the byword of the low quality. To a large extent, China's export structure is not due to the local enterprises improving the technical content of the export, but to the processing trade and foreign enterprises participation. More and more study is focusing on the export product quality analysis and its influencing factors.In order to study the true quality of Chinese exports levels based on the classification method of Lall (2000), this paper divides products of SITC Rev.3 5-8 into the high-tech, mid-tech and low-tech, then makes the marginal improvement in three ways to the Product Quality Index model based on Hallak and Schott (2009). Firstly, add cost and fee that affects the net trade as the argument. Secondly, add the tariff as another argument. Thirdly, choose the Fisher Index as the proxy variable of impure price. Then this paper estimates China and other fifteen countries' export product quality index from 1990 to 2009 based on the improved model. Based on the analysis of the above, the article measures the influence of the per capita GDP, foreign direct investment and R&D spending to export products quality, the main conclusions are as follows:(1) During the 20 years, comparing to other 14 countries, the quality of China's high-tech and mid-tech products in the past 20 years shows a rising trend with steady growth, though the starting point is low. In contrast, the quality of low technology products shows a significant decline in the last 20 years.(2) Net foreign trade is amended, processing trade export and import of the high tech product is eliminated, and what's more, besides the processing trade, foreign enterprises' contribution to net trade is also excluded. After the modification, we find that the quality index of high-tech products in China in 1990 to 2009 is significantly lower than before, which means the processing trade, especially foreign investment-led processing trade does improve the quality of China's high-tech product, so to a large extent, the quality of China's export is overestimated.(3) In the long time effects, the quality improvement of the China's product benefits not only from GDP per capita, foreign-invested enterprises and their contribution of processing trade, but also from the investment of the R&D. R&D plays the most important role in the quality enhancement. In the short time effects, all variables are not significantly concerned with the quality changes.Based on the above conclusions and the present situation, this paper gives the following policy recommendations. Firstly, promote economic growth to advance the export product quality in the endogenetic way. Secondly, encourage business innovation, increase the R&D investment to the enterprises. Thirdly, be scientific and rational in use of foreign investment, accelerate the spillover effect of foreign investment.