The Studies Of Intra-Product Specialization And Twin Surplus In China

Recent years, the problem of twin surplus imposes huge stress on the healthy development of China economy. On the basis of the existent studies, the paper brings forward a new angle of international division——intra-product specialization .The thesis constructs a new theoretical frame of studying the problem of twin surplus through summering the intra-product specialization theories and analyzing the relative decisive factors. In the academic frame, .The thesis inquires into the relationship between intra-product specialization and processing trade as well as the relationship between intra-product specialization and FDI by the analysis of vertical specialization index and much data. The thesis fines the connection of processing trade with the twin surplus and the connection of FDI with the twin surplus as a dominant mode of the intra-product specialization: processing trade is a main source of the surplus of current account. FDI not only brings about the surplus of capital account, but also increases the surplus of current account. Therefore, the paper reveals that the mutual influence of processing trade and FDI on the condition of intra-product specialization is the important factor of the twin surplus in China. Furthermore, difference among different nations on the two account of balance of payment are analyzed. The study shows that the surplus of current account mainly stems from the export to the developed countries, while the surplus of capital account is the result of industrial transfer and mass inflow of FDI from East Asia. The paper further forests the trend of the twin surplus from the view of intra-product specialization: the problem of twin surplus will be consistent in short term. Therefore, the paper puts forward the measurements and implications of solving the twin surplus at the angle of international division: upgrading the processing trade, enhancing the quality and efficiency of FDI, changing the mode of trade growth pattern from the quantity enlargement to quality enhancement.