Empirical Analysis And Prediction On The Change Of Comparative Advantage In Chinese Exports

Since more than30years of the reform and opening-up policy of China from1978, the national economy develops rapidly and the number and the amount of foreign trade grow fast, too. On the basis of H-O factor endowments theory and the stage comparative advantage theory of Bela Balassa, the factor endowments and export product structure and the comparative advantages of export products would be changing as a country’s economy has boomed. Since entering the21st century, joining the world trade organization (WTO), the appreciation of the RMB and the global financial crisis have influenced China. This thesis aims to explore competity eness and comparative advantage changes of China’s export products in the international market as China’s economy has boomed.This thesis uses the revealed comparative advantage index to measure competitiveness and comparative advantage changes of export commodities, which is proposed by Bela Balassa in1965and becomes the common calculation method of comparative advantage of export products in the current international market. Because1is the standard when using revealed comparative advantage index to measure comparative advantage of different products, this measure was biased, In the calculation of different comparative advantages of different countries’export products, this thesis uses symmetrical comparative advantage explicit index for calculation standard which is developed on the basis of revealed comparative advantage index. In accordance with the volume and the proportion of China’s export and import products in the worldwide, using SITC classification standard, this thesis separately calculates the explicit symmetrical comparative advantage indexes of resource-intensive, labor-intensive and technology and capital intensive products of China and analyzes changing situation and reasons of comparative advantage of different products. The thesis concludes that China’s factor endowments has changed as economy developed, which has transformed from the resources endowment to labor and capital technology factor endowments. China’s export product structure also completed a transformation from primary products to the manufactured goods. Meantime labor-intensive products have larger comparative advantage in the international market at this stage, while technology and capital intensive products just show a little bit of comparative advantage after10years rapid development. Therefore the situation of China’s export development is basically in line with H-O factor endowments theory and the stage comparative advantage theory of Bela Balassa. At the time, China’s exchange rate appreciation that is the slow change of exchange has small influence on export products, meanwhile China’s accession to the world trade organization (WTO) has impact on export products. Now in the long term for China joining the world trade organization, along with the cushioning period and abolishment of preferential policies and protective measures, China’s export products have been affected and comparative advantage of our country’s whole export products is reducing gradually.The study of the situation of change about comparative advantage in china export product can predict the future development of china export product. Autoregressive Integrated Moving Average Model is employed in chapter four to predict the export amount and the revealed symmetric comparative advantage index based on the classification of SITC, and then according to the revealed symmetric comparative advantage index, it will predict the situation of change of export amount and comparative advantage in ten years. Based on the actual export amount and comparative advantage from1980to now, and combining the predicted data of Autoregressive Integrated Moving Average Model, the thesis gives a prediction and political suggestion of trade about labor intensive product natural resources intensive product, technology and capital intensive product. Low labor costs is still the main factor to boost the export of labor intensive product in a period time in future, weather the change of demographic bonus will be the key factor to obstruct the economic development in china, the political suggestion is also put forward to this part.There are still some shortcomings in this thesis, because of the knowledge and academic ability. When it comes to the analysis of comparative advantage of export product, the standard of classification is not that meticulous, that is to say, the calculation of RCA index is only based on the nine categories products according to SITC, and then classified into natural resource intensive produce, labor intensive product, capital and technology intensive product. The prediction of data according to the Autoregressive Integrated Moving Average Model is not that accurate, because the data is not available, and it is only based on30data. Because of the limitation of knowledge, it will be not comprehensive and detailed about the political suggestion. China is as the big country of the world’s trade, at the same time, china is lying in transformation period, it is important to study the situation of change about comparative advantage of export product, it also has magnificent meaning for export product and trade economy.