Studies On Transformation And Upgrading Of Processing Trade In China

From the end of "World War II," the international trade and foreign direct investment, as well as the rapid growth of the deepening international division of labor is mainly reflected the level of division of labor on the grounds to the vertical division of labor changes. These changes have become the significant features in the development of world economic. These factors promoted the degree of global economic integration to deepen. China's modern development of processing trade began in the reform and opening-up in 1978. After twenty years of development, through the introduction of substantial foreign investment and use of international advanced technology, the processing trade in China's foreign trade has become the dominant mode of trade, which greatly improved China's foreign trade development and economic progress. However, with the expanding scale of China's processing trade, the increasing consumption of resources; the increasingly fierce international competition which is reflected in the improvement of the surrounding countries'investment environment, cheaper labor costs, obvious advantages in resources. Thus, the competition is increasing between our country and surrounding countries. Besides these unfavorable factors, there exist a lot of unreasonable places in trade structures and results in reduction advantages of China's processing trade, increasing the gap between the eastern and central area in processing trade. In order to solve these problems, processing trade needs transformation and upgrading and it is imperative to promote transfer from the eastern region to the central region.In view of this, the paper is divided into the following parts to discuss and analyze. The first part is the Introduction. It mainly discusses the significance of doing research on the processing trade. Through the search of relevant information about the various scholars'analysis of the processing trade , concludes the main ideas which include digital distribution of processing trade, the transfer of processing trade from the eastern coastal areas to central and western, as well as transformation and upgrading of processing trade issues. We can summarize most scholars do researches on the processing trade impact on the economy and the transformation and upgrading of the processing trade from the respective of enterprises. This article sought another perspective, which is from the regional point of view to analyze transformation and upgrading of China's processing trade and how to transfer processing trade from the eastern part to the Mid-west region. The second part put forward theoretical basis for the processing trade. The primary theoretical basis is the "principle of comparative advantage" theory that was proposed by Ricardian. This theory provided theoretical weapons for all countries carrying out international trade. Regardless of which country, which development stages they are or their national strength, they can identify their respective comparative advantages. As long as they can arrange the production and trade according to comparative advantage , both sides can benefit from trade. The second theory is"factor endowment"which was proposed by Heckscher and Ohlin. According to this theory, resource-rich provinces should develop the deep processing of resources in processing trade in accordance with their own advantages. The provinces with industrial advantages should develop technology-intensive processing trade or by virtue of abundant labor resources in technology-intensive industries or labor-intensive processes to develop aspects in the processing trade. The third theory is Dunning's "Eclectic Theory of International Production". It points an enterprise only has ownership advantages, internalization advantages and location advantages at the same time can carry out foreign direct investment. This theory is also calls the OIL model. It provides a theoretical foundation for the eastern region and western region in development of processing trade by using of their own advantages. Finally, the "gradient transfer theory" provides a theoretical possibility for the processing trade transfer from eastern to central and western regions. The third part gives analysis of the status of eastern part's processing trade at first. The products and structure is increasingly improving, the value is adding year by year, as well as the. Foreign-funded enterprises are still the leading enterprises of processing trade. Then this part explores why the eastern part get the rapid development in the processing trade. The most important reason is national policy of support which has given a series of preferential policies for industrial development to the eastern coastal areas during the early stage of reform and opening up. The next factor is strategic location. Many eastern provinces have plenty of large ports and they are near the main trade partners. The third reason is the substantial influx of foreign investment, mainly putting in job creation, trade expansion, technological advances and promoting economic growth. The last reason is the local governments promote the development of the processing trade vigorously and make efforts to create better opportunities to processing trade enterprises. The fourth part does research on the processing trade in central and western regions. First of all, it lists the status of the central and western regions'processing trade. From the scale perspective, the Mid-west processing trades start late and are in small-scale on the whole. From the perspective of processing industry development, the long-term export growth in the western part is dependent on low value-added primary products export and this result in low export capacity. Besides these two features, the Mid-west is getting slow progress in optimization of the export commodity structure. Then this part analyzes some factors which limit the development of processing trade in central and western regions. The first constrain is low GDP which is the most fundamental constrains in the development of processing trade in central and western regions. The second constrain is higher transportation costs which are caused by inconvenient transport conditions. The third constrain is that the low opening up level of the Mid-west regions cause low inflow of foreign capital and restrict the development of processing trade. The fourth disadvantage is that industrial clusters are difficult to set up, so the effects can't exert well. The last constrain is the poor soft and hard investment environment which restrict the transfer and upgrade of processing trade seriously. The fifth part explores the transformation and upgrading of processing trade from the perspective of region. First of all, it analyzes the feasibility of the processing trade industry shifting to central and western regions. This process is the inevitable result of industrial restructuring. Besides this reason, with the advantages of the eastern region gradually weakening, as well as the central and western regions'protectionism rising, it should be the wisest choice to promote the overall coordination and development of processing trade. In addition, the central and western regions have certain advantages in the labor force, resources and technology. These useful factors provide a good foundation and opportunity to undertake the transfer of processing trade. The third important reason is that the government has introduced new policies to provide protection for the transfer of the processing trade. Finally, this part discusses the measures in transformation and upgrading of processing trade. Firstly, it gives the studying transfer strategies of the processing trade from eastern region to central and western regions, including drawing on the experience of the development of eastern coastal areas, establishing export processing zones in central and western regions which enjoy the same preferential policies the same as eastern coastal areas. Then the central and western regions should select suitable self-development of processing trade in accordance with the principle of comparative advantage, not carrying out blind competition with the eastern part. Besides these two important factors, the Mid-west regions try their best to improve the soft and hard investment environment to attract more investment. Secondly, it proposes the processing trade enterprise enhance innovation capability and R & D capability. The next measure is to cultivate advanced processing trade professionals vigorously. The third measure is to accelerate the development of processing trade industries. Besides, the government departments should exert management functions to optimize the industrial structure of processing trade. These four aspects could promote transformation and upgrading of processing trade.