Intermediate Products Trade And Urban-rural Income Distribution

Since the reform and opening, the economy of china has been developing rapidly, and one of the most important reasons is foreign trade. China is becoming a "world factory" and "Made in China" can be seen everywhere. Our Country has vigorously supported foreign trade and encouraged Chinese companies to "Go out", to be international. In recent years, Chinese products encountered some obstacles in the way to "go out" because of the effect of the financial crisis. Although our country also proposed "Export Turns Sale in Domestic Market" strategy, but our country's economic dependence on foreign trade would remain high judging from long-term development. The development of foreign trade will also have a continuous significant contribution to our country's economy development.With the rapid development of economy, people's standard of living rises ceaselessly, but the income gap of residents in our country is expanding constantly, especially the income gap between urban and rural residents. These problems are growing concern about by the society. In the fourth session of the 11th National People's Congress which was just closed, premier Wen Jiabao also insisted that the future development would include income distribution adjustment. Income distribution is related to the social stability, and it deserves great attention. It's very important to our social stability whether we can figure this problem out properly.As a country of processing trade, China's intermediate products trade holds very large proportion, and it is also the main way which rural labor participates in. It has practical significance to explore the relationship between intermediate products trade and urban-rural income distribution.At present, Chinese scholars' researches about trade and income distribution are mainly aimed at liberalizing trade and regional income gap or the income gap between urban and rural areas, intermediate products trade and labor income gap. The research on relationship between intermediate products trade and urban-rural income distribution is less. This article do a lot of detail research about the above two problems. Based on the literature review of many scholars in this area, this paper first analyzes Chinese intermediate products trade and income distribution between urban and rural areas. By empirical model, this paper analyzes our country's data based on related theories and explores the aspects which intermediate products import and export influence on urban-rural income distribution. Based on the analysis of the empirical results for China's participation in the intermediate products trade and the urban-rural income distribution problems, this paper gives some feasible advices.This paper uses the data of 29 provinces of China (not including Chongqing and Tibet) from 1995 to 2009. Based on Feestra's simple intermediate products trade model, I establish the empirical model and do the empirical analyze through the system estimate of dynamic panel. Through the inspection, I find that import on intermediate products will enlarge urban and rural income distribution gap, while export will narrow the gap. Meanwhile, other facts, such as each province's capital, the number of urban and rural labor, would affect the income distribution gap. Based on these test results, this paper has put forward four strategies which China should attention when participates in intermediate products trade or urban and rural income distribution. I hope these suggestions would play a positive role for China's intermediate products trade development and income distribution adjustment.