China-eu Intra-industry Trade And The Trade Development

Intra-industry trade (IIT) between China and EU has been developing quickly inrecent years, and this dissertation discusses Sino-EU IIT from comprehensive aspectsincluding its current situation, its influential factors as well as possible policyadjustments under the context of IIT.This dissertation applies Bergstrand IIT Index in discussing Sino-EU IIT, and itcalculates the IIT indices in nine product categories under SITC Rev.3from2000to2010. Results show that the IIT level between China and EU is quite high in capital&technology-intensive products and lower in labor-intensive products. IIT betweenChina and EU has more vertical characteristics in capital&technology-intensiveproducts while more horizontal characteristics are found in labor-intensive productsInternational vertical specialization plays an important part in the Sino-EU IIT,and China has merged into the international vertical specialization system under thecontext of huge foreign direct investment (FDI) inflows. However, although thevertical specialization between China and EU and FDI from EU stimulate theSino-EU IIT, China still remains at the bottom of the international specializationsystem as China is mainly undertaking the labor-intensive processes like assembling.Intra-industry trade between China and EU also has impacts on the overallSino-EU economic relations, vertical IIT, mainly under the forms of parts trade andprocessing trade, has become a major trigger for trade frictions. Thus, China has toadopt relative policy adjustments to improve Sino-EU economic relations as well asupdate China’s status in international specialization system. China has to shift fromstatic comparative advantage to dynamic comparative advantage and commit tofostering domestic multinational corporations with international competitiveadvantage.