The Formation, Impact And Prospects Of Regional Production Networks In East Asia

East Asia is the region that has the fastest economic growth speed and the biggest population, and it is known as one of the three major plates supporting the world economic structure. Since the1990s, special regional production networks have emerged and developed in East Asia, which influences the international division of labor, the future of regionalization in East Asia, and determines the role of East Asia in the world economy. Along with the popularity of the vertical division of labor within the product, the economic position of East Asia was greatly promoted in the whole world. Further more, East Asia has become one of the most important focuses in the field of economics because of its well-developed intra-regional production sharing network. Therefore, if we probe into the feature and structure of the intra-product specification and trade in P&C in East Asia, it will be good for better intra-regional cooperation, integration building, as well as enhance the competitive ability and explore the unique and dynamic growing path for East Asia. At the same time, analysis on this phenomenon will help us to understand the essence of production and specialization in East Asia, and, more importantly, China’s role, position, and the coming challenges and opportunities.In this thesis, by quantitative analysis and quantitative analysis, together with a synthesized analysis way by joining historical, institutional, normative and positive perspectives, we analyze and process large amounts of data to find out the characteristics and structure of the East Asian production networks. The text is made up of six chapters, the first chapter is the introduction, contains mainly contains mainly brief introduction of content, purpose, method and innovation, and the concept of defining; The second part is Literature Review; The third chapter, in the perspective of transnational corporations and developing economics, discuss domestic and foreign mechanism of production network formation in theory; the forth chapter, through static and dynamic inspection on trade of parts and components, semi-finished products and other intermediate products derived from the production stage division of labor, multi-angle analyses production net works, and other status quo; The fifth part of this paper presents the facing problems and risks exits in regional production networks, and provides recommendations for future development; The final chapter, in view of China staying in the centre processing position of networks,pay attention to profit and cost involved in the network, arid seek common development in accordance with its own national conditions.The forming and developing process of production networks can be divided into two periods by the early1990s. In the former period, the Flying-geese Pattern supported by Japan produced the embryo of production networks in East Asia. There were two characteristics in this period. First, it was dominated by Japanese enterprises. Second, the division of labor in East Asia spread along industries. Since the early1990’s, the production network shave developed further, and the division of labor spread along the value chains. Division of labor has gone from the tier of "product" into that of "working procedure". The revolution path of international division, inter-industry, intra-industry, Intra-product, reflects the improvement of efficiency. It is the common effect of trade liberalization and technical improvement. In the new division of labor relations, the producing process of the same product is divided into several different stages according to economic comparative advantage of economies, which forms professional production division between economies and base of production networks.The East Asian production networks can be seen as the inter nationalization of enterprise networks. According to the governance theory, the enterprises networks can be classified into three types, i.e., modular networks, relational networks and captive networks. Japanese Keiretsu can be categorized as captive networks, and Overseas Chinese small and medium-sized enterprise networks relational networks. Although USA isn’t a member of East Asia, American enterprises’modular networks spread in East Asia and cultivates the producing abilities of East Asian enterprises significantly. These three kinds of enterprises networks extend in East Asian, and compete and cooperate with each other, hence forming the micro-features of regional production networks in East Asia. The running of regional production networks describes the new appearances of East Asia. Production processes are decentralized, more and more countries participated in international production and trade. Regional production networks in East Asian not only reshapes the division structure of labor, but also impel the economies of the region share development opportunities brought by the division of international production chain. The production networks help the Asian economies to achieve economic growth. It turns out to be a necessary way for the developing economies to join the networks. However, the network has its own inherent shortcomings and problems, how to make the network better development and better services for the East Asian economies requires careful consideration.Compare with other two production networks, we can find out that Europe and North America has rapidly developed, and the integration of EU and NAFTA has made great achievements, the process of economics integration in East Asia has been in a dilemma. It cannot smoothly promote affected by various internal and external factors, and it greatly restricted the potential of economic growth and trade growth. The problems of regional production networks in East Asian is rooted in the economic, political and cultural preconditions peculiar to this region. The constraints include not only economic factors such as the economic gaps among different economies, strong reliance on the Western markets and a huge demand for outside capital.Recently, the United States emphasized global rebalance many times. This brought several challenges to East Asian countries’ export-oriented economic growth model. The US has very close economic relationships with East Asian countries. But the US is currently trying to shift its economic growth strategy from consumption-driven to export-driven and trying to stimulate economic recovery by increasing export. And the weaker dollar policy has become an important strategy to boost US export. Under this new circumstance, East Asian countries now face two major challenges:one is the currency appreciation, which is weakening the price advantage of East Asian countries’ export commodities; another one is the US trade protectionism. In the mid to long term, there are two potential challenges: first, the US reduces demand and import which will undermine the driving force of East Asian countries economic growth; second, East Asian countries look for other export markets which can substitute the US market, and it will lead more severe export competition. Solving these problems required two approaches. Firstly, it asks to expand its own needs in the region, and the big countries should play a role in head, such as China, Japan. On the other hand, EA should establish East Asia Free Trade Agreements and speed up the process of regional economic integration in East Asia. Nevertheless, the East Asia economies are paying close attention to internal needs and import, the problem of trade imbalance may be mitigated soon. On the regional level, the forming and developing of production networks pushes the regionalization process in Asia, and impels it from market-driven to institution-driven. There has a broad prospect for development with the integration of East Asia. East Asia economic integration should take progressive path, realize the transition from the three"10+1" to the"10+3" through the establishment of China-Japan-South Korea Free Trade Aiea, and rescind the restriction of various factors affecting the integration process, to achieve economic integration of East Asia.Nowadays regional economic integration is the trend of the economy in the world, which is also China’s wise choice in participating in the world economy and trade cooperation. Our study shows that China has been deeply integrated into the production network in East Asia and plays an important and positive role in it. The relationship between China and the Tigers is mutual complementary instead substituent within the framework of products division of labor. China which is high-speed developing is promoting the offer and demand increase of intra-regional trade in East Asia, and speeding up the trade evolution in East Asia. The development of regional economic cooperation which has been stimulated by China and the friendly diplomatic policies have enhanced cohesive and appeal forces among every economy in East Asia. With China’s sustained economic development, labor advantage is gradually reducing. FDI will be shifted and reduced.Therefore, China should use the behind advantage, absorb advanced technologies rapidly to enhance the independent research and development capabilities at limited time. On the whole, it’ll be necessary for China to take some policies and measures if she wants the Chinese enterprises to successfully upgrade to the up-stream of value chains, and move to the core position of regional production networks.