| Under the environment of world economy integration, the international specialization is changing from horizontal specialization to vertical specialization. Developing countries take part in the international specialization through processing trade. It had been more than 20 years since processing trade first came to China. Processing trade had brought foreign investment and advanced technique into China, which had contributed greatly to the development of China's international trade and the domestic economy. With the growth of industrial capability, the positive effect of processing trade, which are mostly labor intensive, is no longer as obvious as before. The upgrading and transforming of processing is up to time.Based on analysis of the history and recent situation of Chinese processing trade, processing trade had created huge amount of employment, ease the abundant labor that stampede from villages to the cities. The overflow effect and demonstration effect promoted the advance of Chinese technology and upgrading of industry. Processing trade had contributed greatly to the development of domestic economy and the increase of international competitiveness.In this essay, SWOT analysis had been adopted to analysis the strength, weakness, opportunity and treats that China's processing trade are facing. Nowadays, Chinese processing trade are still mainly rely on labor intensive industry. The abundant labor and well formed labor intensive manufacture industry remains the major advantage. However, the major treat to the development is still in this aspect. The value chain in labor intensive industry in relatively short while the value added rate is low, which cannot be a long term developing strategy for the processing trade as well as the domestic economy. Processing trade industry in China is lack of core technology and self-owned brands. Most key technologies are hold by foreign companies. Native enterprises, which are weak in research and development, seldom have their own technology. Domestic matching industry is also weak in producing capability. In this situation, processing trade cannot fully promote local economy. The domestic politics also has disadvantages. Although China is completing and improving domestic regulation, intellectual patent protection is still not perfect.Based on the analysis, the author advanced several advises for the transforming and upgrading of Chinese processing trade. First of all, China should focus on the technology intensive producing link. As the international vertical specialization, the relative advantage can hardly be told by the industry that a country involved in rather than some part of the international value chain. Therefore it is not necessary to involved in the whole industry. Secondly, innovation and technology upgrading should be encouraged. The government should encourage multinational companies establish R&D as well as processing trade to improve the research ability of China, encourage enterprises to involved in R&D, promote the co-development and research and cooperation in technology development. Native enterprises should attach importance to innovation and brand building, increase investment in R&D. Thirdly, the promotion effect of processing trade was not fully brought into play, which is mainly because of the restrict of producing capability of native matching industries. Therefore the relative industry should also improve the production process and technology to improve the quality of their products.Although the future focus will be technology intensive industry, labor intensive industry still has its developing space in China. The labor resource advantage central and west China is not fully make use of. We can transfer the labor intensive processing trade there. |
