Study On The Determinants Of Intra-industry Trade Of Mechanical And Electrical Products Between China And ASEAN

As a most important kind of products in the trade between China and ASEAN, the mechanical andelectrical products have taken the1stplace in the bilateral trade since1990s. ASEAN has been the4thexport destination as well as the5thsource of import of the mechanical and electrical products.Therefore, the study on the bilateral trade of the mechanical and electrical products makes great sense inthe background of the establishment of CAFTA.In this paper, it analyzes the scale, the structure of commodities and the national characteristics ofthe mechanical and electrical products trade between China and ASEAN, with the50groups of SITC7as the different industries of mechanical and electrical products. The unbalance between differentindustries and different countries coexist with the rapid development of the bilateral trade volume ofmechanical and electrical products. The trade of mechanical and electrical products between China andASEAN mainly attaches to the77th,75th,76thand74thgroup of commodities, while the trade partnersare the six major countries of ASEAN, i.e. Singapore, Malaysia, Thailand, Philippine, Indonesia andVietnam. It turns out that the overall level of the intra-industry trade of mechanical and electricalproducts between China and ASEAN, with G-L index as the measurement of intra-industry trade. Withfurther analysis, it shows that the development of the intra-industry trade in different industries anddifferent countries is unbalanced. And some low-added-value commodities are most important in theintra-industry trade.Combining the theoretical analysis and empirical analys is in this paper, it analyzes the factorswhich affect the development of intra-industry trade of mechanical and electrical products, including thelevel of economic development, economies of scale, market factors, the degree of economic integration,foreign direct investment and geographic factors. Respectively using error correction model (ECM),vector autoregressive model (VAR) regression analysis to eight key industries, we found that thedifference in per capita GDP between China and ASEAN plays a decisive role in the intra-industry tradeof mechanical and electrical products. So does China’s actual use of foreign direct investment (FDI1).China should comprehensively promote trade cooperation with ASEAN in all the industries, in order tobuild the complementary industry chain inner China-ASEAN area. Meanwhile, China should expandthe scale of FDI in mechanical and electrical industry, optimize the composition of the FDI, promotetechnological innovation and progress, improve the quality of economic development, and optimize thestructure of commodity trade in machinery and electronic products industry. Only in that way, Chinawould take a more favorable position in the trade of mechanical and electrical products.