China's Trade Openness And Economic Growth

In the process of globalization, economists pay more and more attention to the issue of economic growth in the open environment. Trade openness is a basic index measuring the degree of openness of a country (or district). It also reflects the degree of participating in the international distribution. Participating in the international distribution could allocate resources in the worldwide market, which can promote the efficiency of distribution and the economic growth. With the deepening of globalization, the relationship between trade openness and economic growth will be closer. In order to realize the "win-win" development of trade and economic growth, it's necessary to analyze their precise relationship and mechanism.Since the reform and opening-up in 1978, China's trade openness and economic growth have obtained huge achievements. The trade openness develops more quickly than economic growth. Weather the trade openness promotes economic growth and weather it has positive effect on economic quality or quantity, and weather ETI (Export Trade Interdependence) and ITI (Import Trade Interdependence) impacts the economic growth through the same way, these questions should be considered seriously. This paper analyzes their relationship from the point of views of theory and empirical in the foundation of previous studies of other economists'. Firstly, this paper introduces the theories of the relationship between international trade and economic growth; then it conducts a historical study of the China's trade openness and economic growth. At the basis of the above parts, the author gives the assumption that China's trade openness has positive affect on the economic growth .The author also assumes that the ETI and ITI effect economic growth through different mechanisms. Then the author analyzes their relationship using econometrics methods. The conclusion shows that China's trade openness improves the total factor productivity but doesn't improve the GDP, which are not consistent with the assumption. It also shows that ETI impacts economic growth through fixed investment and labor, but ITI just has positive effect on China's fixed investment, which are consistent with the assumption in the above part. Through the analysis the author also draw the attention that China is faced with some serious problems. China's trade openness doesn't improve GDP obviously reflects that some problems needed to be resolved timely such as degradation of trade structure and deterioration of the terms of trade. At the end of paper, the author gives up some strategy and policy solutions accordingly in order to sustain China's trade openness and economic growth such as optimizing the structure of exporting goods,improving the ability of R&D.