Explanation Of China's Trade Surplus

In the issue of China's trade surplus, there are five questions should be solved:(1) Why the East Asian emerging economies have experienced a significant trade surplus? (2) Why China's trade surplus can exist for such a long time and expand increasingly? (3) How to explain trade imbalance between China and the U.S? (4) Why China has trade surplus with the United States, while has a trade deficit with Japan? (5) Can China's trade surplus problem be analyzed in a complete logical frame? This paper will resolve them comprehensively under the framework of human capital.This research shows that the basic reason of China's lasting trade surplus lies in "learning by doing" and "human capital investment", both of which are human capital accumulation models. The specific reasons are as follows:First, human capital that relies on "learning by doing" mainly concentrated in low-technology industries, leading to a low grade industrial lock and a single industry model, which can only be resolved through exporting excess product; Second, locked industries possess traditional comparative advantages, which take up the leading position in the international market, thus the expansion of reproduction do not need to import raw materials and intermediate inputs because the domestic market can provide them; Third, in order to accumulate more saving for human capital investment, household sector spend less on consumption goods, thus Chinese household sector has a low consumption proneness for import goods. During this process, the pace of the industrial structure upgrade is slow because the high-tech industry human capital accumulation is slow compared to that of physical capital. The laid-up capital is piling up, further exacerbating the imbalance of economic structure and expanding the trade surplus.To solve China's problem of trade surplus, one simple and feasible way is to link the two models of human capital accumulation of "human capital investment" and "learning by doing", basically improve China's economic structure including trade structure, industrial structure and demand structure.