Study On The Environmental Effects Of China's Processing Trade

As the dominating trade mode of China, processing trade plays an important role in promoting the economic growth, technology advancement, attraction for foreign direct investment (FDI) and employment of our country. But, when the processing trade develops consistently and rapidly, the total amount of industrial pollution grows even faster. The environment of China becomes more serious. How to coordinate the processing trade and environment turns to be a big problem which needs solving as soon as possible.On the basis of related theories and studies, general research of China's processing trade and environment effects is carried out respectively from the aspect of region and industry. And then, the environmental effects caused by processing trade are analyzed and studied by econometric method of Panel Data Model.The empirical test shows that the processing trade worsens the environment of our country significantly, especially in eastern and central area, while the effects are not obvious in west China. But the processing trade's positive influence on economy and employment should not be denied just because of its short-term negative effects on environment. Some suggestions are recommended for different areas to promote the upgrade and shift of processing trade according to their comparative advantage in order to coordinate the conflicts between processing trade and environment and fulfill the win-win target of them in China.