Influence Of Foreign Trade On China's Economic Growth Theory And Empirical Research

Trade and economic growth theory is an old, eternal proposition of western economics. Beginning from mercantilism in the 15th century to the new economic growth theory of the eighties of the 20th century, trade and economic growth theory is one of issues that economists focus on all the time.Since its economic reform and opening-up, China's foreign trade has increased swiftly, and then the issue of what effects trade would have on economic growth has attracted prevalent attention of Chinese scholars. However, there isn't a unanimous view and conclusion reached among the Chinese scholars on the relationship between trade and economic growth of China. Some of the scholars have analyzed the effects of foreign trade on economic growth with positive analyzing method as the western economists do, by using some variables of foreign trade such as export value, import value and terms of trade. But these analyses were based on the linear regression model with only two variables. I think this is worth discussing. In this paper an attempt of certain modifications based on what they have studied is made by using cointegrating regression analysis with multiple variables in order that the effects of foreign trade on economic growth of China can be demonstrated more exactly.The thesis is composed of three major parts, four chapters in all: Chapter one and two are studies on the theory of the relationships between trade and economic growth; Chapter three is the positive analysis of the linkage of China's foreign trade and its economic growth; Chapter four is policy suggestions.Chapter one is introduction, in which, there are two kinds of views of western economists on trade and economic growth theory introduced: "Trade is the engine of growth" and "Trade as a hand-maiden of growth". Then Chinese scholars are mentioned for their studies on the linkage of China's foreign trade and GDP. By positive analyses using linear regressions with some certain variables, they have achieved different conclusions about the effects of trade on economic growth, and some of their analyses need study further.Chapter two analyzes theoretically the mechanism how trade effects the economic growth. That is to say that the export leads to demand-pulling effect, which spurs economic growth; while imported technology promotes economic growth andtrade structure spurs economic growth through national industrial structure.Chapter three gives the results of positive analysis based on the changing export value, import value, trade structure and GDP from 1981 to 2001. Then explanations are made to the results of the positive analysis.Chapter four is focused on some policy suggestions. According to the theoretical and positive analyses in the second and the third chapters, some views and suggestions are put forward on how to improve the circumstances for foreign trade and economic growth; how to expand the export of the surplus products; how to speed up the technology importation and how to optimize the commodity structure of export of China.