The Research On Differences Between Intra-product Trade And General Trade

Processing trade and general trade are the most predominant trade patterns of Chinese foreign trade. They have played essential role in accelerating economic development in China; moreover, they are also of great importance to upgrading of China’s industrial structure. Due to the substantial difference between processing and general trade, the two different trade patterns have different impact on Chinese industrial upgrading. An investigation on the different influences of processing and general trade and the origins of these differences are of great theoretical and practical significance to promote industrial structure through foreign trade.This thesis analyses the different impact of general and processing trade on industrial upgrading in the following aspects. Initially, literature review summaries the relevant researches on the relationship between foreign and industrial structure as well as the differences between processing and general trade. Most references investigated the relationship between foreign trade and industrial structure in terms of the overall condition of international trade rather than base on different trade patterns. Most of references compared the processing and general trade in terms of the different influences they have on economic growth rather than the different effects they have on upgrading of industrial structure.The second chapter mainly investigates on the current situation and the potential issues of the two trade patterns and china’s industrial structure. The developing process of the two trade patterns could be divided into four phrases according to the relative numerical relation between them. According to analysis, processing trade have more serious drawbacks and disadvantages, such as high energy consumption, serious pollution, highly labor intensive development, low value-added, low technology and excessive competition. There are also conspicuous problems in china’s industrial structure despite of the continuous process it has achieved. The essential problems include the low percentage of the third industry, the weak creative capacity, the low value-added and etc.The forth part is positive research on different influences these two trade patterns have on upgrading of industrial structure. Via stata10, cointegration analysis uses the industrial index, the import and export of processing and general trade between the year1981and2009. General trade could promote China’s industrial structure upgrading, whereas intra-product trade represented by processing trade. The third chapter mainly analyzes the different impacts of the two trade patterns on upgrading of industrial structure. The different influences result from four aspects, including technology diffusion and innovation, distribution of trade benefit, trade friction and cost of domestic resources and environment.The fifth part comes to the conclusion and proposes some policy suggestions based on the theoretical and positive research. The two trade patterns have great difference in influencing upgrading of industrial structure because of the substantial differences between them. Consequently, in order to promote the positive coordination between foreign and industrial structure, we should emphasize the positive effect of general trade and accelerate its development. On the other hand, to overcome the negative effect of processing trade, the upgrading and transformation is of great importance.