A Research On Trade Competitiveness Of Electromechanical Products Between China And South Korea

Since the establishment of diplomatic relations, China and South Korea have achieved great developments on economic and trade activities at an unprecedented rate. The two countries have become each other's important trade partners. In particular electromechanical products trade has become the focus of bilateral trade. Based on data from 1992-2009, firstly the paper starts from researching import and export structure between China and South Korea, then finds out that represented by base metal factor-intensive electromechanical products are more competitive in the bilateral trade, and represented by machinery products technology and capital-intensive electromechanical products is still at a competitive disadvantage. Secondly, through measuring changes of trade competitiveness empirical by revealed comparative advantage index and trade competitiveness index, the trade competitiveness of electromechanical products between China and South Korea shows a rising trend. The ascension of competitive advantage caused by changes of Sino-Korea trade structure is due to exports of electromechanical products from China to South Korea mostly related with investments from South Korea. Most economic benefits doesn't flow into China, welfare increases to a limited extent. However, compared with South Korea, both national competitiveness and product competitiveness of China have promoted. Thus total competitiveness of China has promoted, which means the inflow of economic benefits and increase of social welfare for China. Thirdly,it is concluded that electromechanical products trade belongs to vertical division of labor through measuring the GL index. At last, a co-integration model will be constructed to inspect the impaction of capital accumulation, technological innovation, income level and FDI on trade competitiveness. it is concluded that capital accumulation and technological innovation is the internal path to realize improvement of trade competitiveness and income level and FDI are the macro security for promotion of trade competitiveness. In addition, in connection with improvements of both trade competitiveness and international division of labor, proposals and suggestions are suggested from the three views of macroscopic, the middle and microcosmic. Form macroscopic aspects, per capita income levels should be increased, investment environment should be improved and links with multinational corporations should be strengthened. Form the middle aspects, metal category of electromechanical products need technological innovation. The export structure of non-metal category of electromechanical products need optimization and the promotion by overall competitiveness of electromechanical products need industrial agglomeration ascension. Form microcosmic aspects, to strengthen technology digestion, to enhance technological innovation and to implement international marketing strategy are good suggestions for enhancements of trade competitiveness of electromechanical products.