Research On The New Trade Theory Based On The Export Of Private Enterprises In Jiangsu Province

This paper discusses the reasons and suggestions on the decline of China’s foreign trade in recent years from the perspective of New-New Trade Theory. Building on the basis of literature and theoretical review, the key content of this paper includes two parts.The first part is empirical test. We use the data of private enterprises in Jiangsu from the industrial database to do empirical test, the data indexes include productivity and export delivery value. Jiangsu is an export-oriented province with strong power, so the decision-making of private enterprises has market-oriented characteristics. Thus we use the Jiangsu private enterprises as the major study objects. To ensure the rationality and credibility of the results, the test includes three steps. The first step, we test the relationship between productivity and export from different ownership and industry types. The second step, we throw away the data of state-owned enterprises and foreign enterprises and select the Jiangsu private manufacturing enterprises to do the test. The third step, we do the further test about the private listed companies. Because the decision-making of these companies are more standardize compared with minor enterprises. The results show that the high productivity enterprises first occupy the domestic market and the low productivity enterprises have a high export tendency. The results validate the phenomenon of "productivity paradox", which has gained wide attention and discussion of the academic circles in China. This phenomenon is remarkable in the field of Jiangsu private manufacturing enterprises.The second part is extended analysis. This paper gives the explanation of the paradox、the questions and suggestions from two aspects of theory and reality. The New-New Trade Theory set a model based on mature market. In such circumstances, the cost of exports is higher than the cost of domestic sales. Also, there has been convergence in the profitability between competition and integration. Some minor private enterprises have lower export cost because they accept international trade order for a long time. On the other hand, if they expand the domestic market, they will bear higher transaction cost. Domestic profit is much higher than profit in the international market because of distortion in the domestic system and structure. Thus, many enterprises with higher productivity prefer to enter domestic monopoly sector、property market and consumer durables field. Some minor enterprises with lower productivity have to enter international market and earn scanty profit. This phenomenon is called "be squeezed out". Minor enterprises are vulnerable members, but they are also the main body of export. In this situation, the decline of export is inevitable. This paper further analyzes the current situation of the development of private enterprises in Jiangsu:in the transition period of differentiation and transformation. Most enterprises which rely on the traditional industries of labor advantage will be eliminated by the international market. High tech enterprises which rely on technology and innovation will win the international markets step by step. A small number of high productivity of private enterprises is carrying on FDI, which will replace international trade. This is another reason for the falling export.Then this paper put forward some solutions. We should focus on the development of real economy in order to promote exports through reform. We should break traditional monopoly and help the high productivity enterprises reduce the dependency on the local market. And not all the minor enterprises should be fostered. The policy should focus on those enterprises with higher productivity, helping them cross "Threshold Effect" and realize the structural upgrading of exportation. We should build protection system for OFDI, and encourage more enterprises to make great strides forward the international commercial track.