The Research On The Promotion Of The Processing Trade To Chinese Industrial Upgrading

On the background of industrial globalization today, being a classic form of the Intra-product Specialization, processing trade is an effective way to accept the international industry transfer and gain domestic industrial upgrading. Based on this view, the article introduces an intra-product model to demonstrate the promotion of processing trade on the industrial upgrading in one country and carries on an empirical test. Meanwhile, it tries to discuss the influence channel and the existing problems about the promotion.After the literature review with respect to the processing trade ,the article introduces an intra-product model by Feenstra and Hanson(1996) named the Continuum of Inputs Model, and then utilizes the comparative static method in economics to analyze the processing trade, the model proves that the processing trade will help"dynamic climbing"in the global value chain clusters among the participating industries in the opening economical conditions, and manifests the promotion of processing trade on the industrial upgrading. Next, by making use of the Cointegration Test and the Granger Causality Test and choosing the data of the processing trade and the factor intensity ratio, the promotion is absolutely proved. The result indicates that the import content of processing trade mainly causes the promotion, the export content being not remarkable. It reflects the reality of low domestic value-added ratio and short industry chain clusters of processing trade in China as well.The article further analyzes and discusses the influence channel of the promotion of processing trade on the industrial upgrading, which is included as follows: the capital supplying effect, the technique transforming and overflowing effect, the industry connecting effect, the export demonstrating and competing effect. At the same time, according to the objective reality in China, a study shows a series of problems existing in the promotion of processing trade on the industrial upgrading, which prominently concerns the technical content being not high, the technique transforming and overflowing effect being not obvious and the industrial assembling capacity being insufficient . The study also shows that the development of processing trade in China has great potential , its positive act on the domestic industrial upgrading has been not fully released yet. Eventually, a number of policies on how to speed up the...