Transformation And Upgrading Of China's Processing Trade

Processing trade is a kind of important way that developing countries participate in the international division in the economic globalization background. After more than 20 years of development, processing trade has made historical contribution for the economic and social development of our country. But it has a lot of problems that can't be ignored too. Under the new situation, The Third Plenary Session of the 16th Central Committee of the Communist Party of China passed "A Decision on Issues Regarding the Improvement of the Socialist Market Economic System" and it stated that China should "continue to develop processing trade, to attract multinational corporations in order to transfer more sophisticated and advanced technology, more value-added processing expertise and research centers to China, and to lead to the transformation and enhancements of processing trade". This thesis tries to hold the above policy as a guiding principle, and to investigate the transformation and upgrading direction and strategy of China's processing trade, on the basis of thoroughly analyzing the current conditions and existed problems China's processing trade is encountering. The purpose of the thesis is to promote the further developments of China's processing trade, and to make some practical recommendations for improvements of China's overall economic and social development level.The article has analysed the certainty of transformation and enhancements of processing trade, the theoretical foundation of processing trade and the limitation of comparative advantage for processing trade today. According to Michael Potter's competition advantage theory, the thesis proposes that "the transformation and enhancements of processing trade of our country should based on comparative advantage, strengthen competition advantages". The thesis will base on the "four factors model" and the "value chain" theory of competition advantage theory, roundly investigate the technological progress, domestic value chains and overseas distributions of the processing trade.