A Research On The Development Of China's Economy And Trade: An Intra-Product Specialization Perspective

Alongside with the globalization trend, the forms of international specialization show new characters and trend of development. Specialization changed from intra-industry and inside industry to intra-industry, which led to intra-industry trade. This accelerates globalization and brings more countries inside of global production system. Though developing countries take part based on comparative advantage of labor-intensive and have a comparatively low status and gain less than the developed countries, they could promote their own development, technology and industry upgrade by join in the intra-product specialization and trade. From the experience of China's 30 years'reform and open-up practice, China's economy and trade made great progress, while there are still a lot of problems. Thus it shows great importance to look into the mechanism of intra-product influencing economy and trade and to locate the new problems it brings to a country.This research is base on relative literature review and comment. In the theoretical part, this article discussed the mechanism of intra-product specialization influencing developing countries'economy development from comparative advantage, scale economy, multi-national corporations, upgrade of processing trade, etc. In the empirical part, I shall discuss the valuation of China's participating level in intra-product specialization and made some analysis. The result shows that the participation level is going up with VSS index growing higher and higher. The sects China takes part in are mainly capital (or technology) intensive industries of manufacturing industries, which shows that China is taking part in international intra-product specialization in labor intensive parts of capital (or technology) intensive industries. Then I shall do a econometric analysis on the influence of intra-product specialization on China's economy growth using VAR model. The result shows a long-term equilibrium relationship between them. Intra-product specialization could bring in multi-national corporation investment to increase capital stock and more advanced technology, in which way it can help promote China's industry upgrade and economic growth. Then we come to the status in quo and initial problems of China's trade development. We could see that processing trade in the dominant trade form that China takes in the specialization, and it made great contribution to the trade growth. Along with the upgrade of processing trade in structure of commodities, China is facing subject structure balance problem and trade frictions etc. There are still more problems for China, which are demand on the upgrade of processing trade, principle of originality, the bottle-neck constraint brought up by weakening comparative advantage and so on.In the last part of this article, I will make some advice against all these problems. China should define its status in specialization clearly and try hard to upgrade it processing trade, pay more attention to the principle of originality, deal with the trade friction properly and solve the bottle-neck problem caused by weakening comparative advantage in multiple ways.