Impacts Of China's Intra-product Trade On Income Distribution

The last three decades has witnessed the emergency of intra-product specialization as one of the important forms of labor division, and the drastic growth of trade in intermediate products under the economic globalization and technological process. Via intra-product specialization and intermediate goods trade, countries have been specializing in the specific process and parts and components in the chain of production and trade, which has affected their employment structure and income distribution. China has participated in the intra-product division in the form of processing trade and has become the centre of world processing. The paper takes the manufacturing industry as the subject and study the effect of intra-product specialization on the income distribution of China's manufacturing industry.This paper focuses on the intra-product specialization and income distribution, consisting of three parts: first, based on the theories of previous works on the effect of trade on income distribution, the paper analyzes the rationality and limitation of classic trade and new trade theory in the aspect of explaining income distribution. The paper also holds the view that the model of international specialization has experienced the transition from inter-industry and intra-industry division to intra-product division. So the key factor in studying international trade's effect on income distribution is to analyze the transition of modern international division. Based on this, the paper reviews the relative study achievements on intra-product specialization, intermediate inputs trade and its effect on income distribution. Second, based on the theories referred above, the paper uses statistics to give a systematic analysis on the intra-product trade and income distribution of China's manufacturing industry from four aspects: the mode structure of China's foreign trade, the current situation and the employment and income level of China's manufacturing industry. Through building a calculating model, the paper carries out empirical analysis gains such a conclusion: the import and export of intermediate inputs will decrease and increase the relative income level of skilled workers respectively. In the end, the paper comes up with the policy suggestions to control the relative income distribution gap.