An Analysis On The Dual Margin Of China’s Export To United States And Its Affections

Since China’s formally entry into the WTO in2001, the growth of export from China to United States is very rapid. United States gradually became one of China’s most important trading partner countries. So, how does China achieve its exports trade expansion to United States? Whether it’s achieved by intensive margin or extensive margin? Based on this, this paper is trying to take the export from China to United States as the research object, study the dual margin of China’s export trade, and then anglicize the related factors affecting the dual margin. Dual margin essentially is the structural decomposition of export trade flow:intensive margin is the trade flow caused by quantity expansion of products which have already been exported before, that means the trade growth mainly relies on low price and large quantities export. While, extensive margin refers to the trade flow caused by products new entered or exited, and it means the country mainly export the high price and high quality goods.This paper firstly reviews the literatures about dual margin, and addresses it from three aspects, including the concept definition, measurement methods, and theoretical models. Then the author also depict the current situation of China’s export trade to United States by describing the trade growth, trade construction and trade direction.Using product-levels export data, this paper make a dual margin decomposition of China’s export trade to United States from the perspectives of product types and value. The results show that, China’s export trade expansion is mainly achieved along the intensive margin. Finally, based on the current situation and dual margin features of China’s export to United States, this paper make an empirical test to the factors affecting the dual margin. Using the trade data from1992to2010, I selected the economic size of import country, trade cost and multilateral trade resistance as impact factors to establish VAR model of intensive margin and extensive margin as well as making cointegration and impulse response analysis. Empirical results show that:bilateral trade cost is the first effect element of China’s export trade growth to United States. The increase of bilateral trade cost will produce significant inhibition to dual margin, especially to extensive margin. The import country’s economic development level will produce mostly the same positive effect on both intensive margin and extensive margin. While, the negative effect of multilateral trade resistance to intensive margin is quite more obvious than to extensive margin.Based on the theoretical analysis and empirical research, this article finally come up with some corresponding countermeasures and suggestion to our present situation that China’s export to United State excessively dependent on intensive margin:Both intensive margin and extensive margin can be achieve by reducing the trade cost; What’s more, firms should strengthen the product diversity through innovation and R&D; And also, we need to add more value to export goods and improve their quantity, in order to change the export growth mode of China; Moreover, the export market structure should be adjusted to diversity, because focusing our export on a single country has much more risks when the world economy fluctuates.