Study On China's Automobile Intra-industry Trade

With the rapid growth of China's economy, China's automobile industry has developed rapidly. In 2010, both the volume of products and sales of China's automobile reached a new high, with more than 18 million, ranking first in the world. Meanwhile, the Chinese foreign trade has also experienced rapid development in automobile industry. China's automobile trade increased from $8.149 billion in 2000 to $87.895 billion in 2010, with an average growth rate of 26.85%. In international economic activities, intra-industry trade can improve the status of the participators in the international division of labor, and also the important manifestation of the competitiveness of a country's foreign trade. Developing intra-industry trade has become a trend and a direction to improve a country's trade level. Is China's automobile trade a simple inter-industry trade or a high level intra-industry trade, behind a gapid growth? What's the reasons for China's low level automobile intra-industry trade? How will China develop its automobile intra-industry trade in order to improve its industrial competitiveness? This paper will study these issues.First of all, this paper reviews the domestic and foreign literature about intra-industry trade and discusses the basic theory of intra-industry trade analysis. Secondly, according to the data of the United Nations Commodity Trade Statistics Database, this paper estimates the level of China's automobile trade, and studys its development from the characteristics. Comparing automobile products'export/import unit prices to/from USA between China, Japan and Canada, this paper reveals the difference in the quality of the automobile products between China and the developed automobile trade countries. Thirdly, this paper makes an empirical analysis on major factors which affect China's automobile intra-industry. The results shows that enterprises'economies of scale,product differentiation and FDI in China's automobile industry have a positive effect on China's automobile intra-industry. Finally, this paper analyzes the reasons for the low level of China's automobile intra-industry.This paper argues that China should improve the level of the FDI in automobile industry and its utilization's efficiency , improve the economies of scale, strenghthen the R&D to develop differentiated products and so on, in order to promote the development of China's automobile intra-industry trade and get the long-term competitive advantage in automobile industry.