Analysis On The Relationship Between Intermediate Goods Imports And Economic Growth In China

In recent decades, due to the deepening of the international division and the development of vertical specialization, the structure of imports has been greatly changed, the production and trade of intermediate products has been growing rapidly, and it becomes the major factors of world trade's growth. China imports of intermediate products has entered a rapid development track, the value of trade increases from 76.499 billion US dollars in 1995 to 381.066 billion US dollars in 2005, accounting for a share of China total imports for 55% to 70%.It has become the main component of China imports. The import of intermediate goods is different from the import of final product. It has a direct access to production areas, and has a direct impact on economic growth of the import country. So study of the relationship between the imports of intermediate goods and the economic growth seems particularly important.The paper takes the import of intermediate goods and economic growth as a main content to study. In the theory part, the paper studies from Edgeworth box map, the relative shortage of factor of growth and the mechanism of imports of intermediate goods impacting on economic growth. The results show that the import of intermediate goods not only increases the consumption of final product in importing countries, but also increases the production of final product in importing countries, and improves the welfare of the importing country, so it has a significant impact on economic growth. In the empirical part, This paper unfolds that the import of intermediate products promotes the development of China manufacturing industry (especially machinery and transport equipment industry) by amount of data research, and the import of intermediate products promotes the involvement of specialization on world vertical specialization and development of China processing trade, and thus it accelerates the development of China economy. Meanwhile, the import of intermediate products enhances the competitiveness of China export commodities and expands exports. To prove whether there is the correlation between China imports of intermediate products and the economic growth, the paper makes empirical analysis studies the long-term relationship between intermediate goods imports and economic growth, using cointegration test and the test of causation. The results show that the import of intermediate goods promotes China economic growth. In the long term, intermediate goods imports increased by 1%, GDP would increase 0.617745%. In the short term, intermediate goods imports increased by 1%, GDP would increase 0.600227%. And the change of imports of intermediate products is the reason that leads to the changes of GDP,the paper makes conclusions. Finally, the paper gives some corresponding policy recommendations on the base.