Effect Of Intra-product Trade On Industrial Structure Upgrading Of China

Since the1970s, with the development of intra-product trade originally productionwhich focused on a region or a country is scattered to different regions or countries, eachregion or country therefore specialized in the production of a special stage of the productor parts, so that the international division of labor refinement to the inside of theproduct.The improvement of the degree of international division of labor promote theoptimization and upgrading of industrial structure. But in the process of intra-producttrade China is in the low end of the global value chain. This situation slows down theprocess of optimization of the industrial structure.This paper researched the effect of intra-product trade on industrial structureupgrading of China from the point of theory and empirical study. Theoretical studies haveshown that Intra-product trade has two opposite effects in China’s industrial structureupgrading.The aspects which have positive effects on our country’s industrial structureupgrading are the effect of technology spillover, the effect of learning-by-doing and theeffect of economy of scale, which all come from the intra-product trade, the first twoimprove the technical level of our country, and the last one improves productivity ofindustry. On the other hand, the effect of trade division locking which also comes from theintra-product trade will restrain the productivity of our country’s industry, and havenegative effects on our country’s industrial structure upgrading.In this paper, we used intra-product trade as indicators to measure the degree ofintra-product trade and carried out an empirical study of the effect of intra-product tradeon industrial structure upgrading with Granger causality test. Empirical studies haveshown that the impact of intra-product trade on the primary industry products does notsignificantly.But it raise the level of the secondary industry. The improvement of the levelof the tertiary industry promotes the development of the intra-product trade. Generallyspeaking, the development of trade in the product has a role in promoting the upgrading ofthe industrial structure, the effect of technology spillover、learning-by-doing and economyof scale is greater than trade division locking. We should take measures to promote theupgrading of industrial structure such as improving the processing trade policy, developing industrial clusters, enhancing the degree of association of processing trade industry andencouraging technological innovation.