China's Industrial Competitiveness Upgrade Path Choice

Entry to WTO is the most key pace for China going to World Economy System, and also is the important progress of Economy Globalization. Foreign Trade plays an important role in economy development of a country. China will encounter with severe challenge. China industry will come across heavy competition in international division and international trade. So it is very important to enhance the industry competitive power. Traditional Theory of Comparative Advantage has guided the international division for a long time. But with economy globalization, it can't explain international trade nowadays. Theory of competitive advantage provides a clue to China industry development. The thesis reviews the traditional and modern trade theory based on comparative advantage, and then we introduce Theory of competitive advantage. To raise competitive power of China industry, we must realize a leap from comparative advantage to competitive advantage, that is to say to acquire more sustainable comparative advantage, which give a way for strategic choice of China industry development.First of all, the preface introduce the topic background, the research content ,the method, and the innovation spot of this article.Secondly, the thesis analyzes the theory of comparative advantage and competitive advantage. Traditional comparative advantage went through three steps: absolute advantage, comparative advantage and factor endowment theory. The Leontief Paradox indicated that traditional comparative advantage can't explain many problems in international trade. There came up modern trade theory based on comparative advantage, intra-industry trade on the behalf. Because these Main international trade theories have their shortcoming, competitive advantage gives way to develop China industry into international division. Compared with comparative advantage, competitive advantage theory explain international trade from microcosmic point, that is to say how an enterprise enter international competition, which makes very up for the shortcoming of the Main international trade theory.Thirdly, the thesis analyzes comparative advantage strategy that China carry out in industry, including its inevitability in history, its objective result and analyze industry with comparative advantage .We learn from analysis that China industry will go into "comparative advantage trap". So an industry with comparative advantage will not surely be competitive in world market. To promote the competitive power of China industry is to transform comparative advantage to competitive advantage.Fourthly, the thesis analyzes the international situation and domestic condition for China industry's translation from comparative advantage to competitive advantage, and gets three approaches to realize such translation. One approach is to promote comparative advantage; the other one is technology innovation; the last approach is to improve government function.Lastly, Summarize main content of this article and propose the problem not yet solved in this field.