The Domestic Sophistication And Determinants Of Chinese Manufacturing Exports

Since the1990s, China has rapidly integrated into the global production networks which regard the vertical specialization division as main content through the advantages of cheap labor cost and a series of preferential policies of processing trade, and China now has become the centre of the East Asian production networks, the export platform to Western-oriented countries about final product and has played the role of "world factory" in the global production network. Not only the quantity of Chinese manufacturing exports has grown rapidly, but also the structure has optimized constantly. So, how high is China export products technology content, especially the domestic technology content? What factors determine China export products technology content? These is what this paper attempts to explore.This paper uses Hausmann’s (2005) method to quantify the technical structure of export product, at the same time considering the influence of vertical specialization, and learn from Meng Meng’s (2012) method to eliminate the technology content from the imported intermediate products, so we can clearly depict the domestic technology content of export products under the background of new international division. This paper uses both qualitative analysis and quantitative analysis. Firstly, this paper make comparison between total technology content and domestic technology content from three different aspects. The results are that Chinese total technology content and domestic technology content of manufacturing exports grow steadily, and total technology content is higher than domestic technology content. But the growth rate of domestic technology content is slightly higher than total technology content. Total technology content and domestic technology content of China and OECD countries export products as well as specific industry all the communications industry are increasing steadily and the gap is narrowing.Secondly, on the basis of qualitative analysis, this paper further uses two panel data model respectively for empirical analysis. The conclusions are as follows:First, the vertical specialization promotes the improvement of total technology content of manufacturing export products, but fails to promote the domestic technology content. Second, the proportion of capital and labor R&D improve both the total technology content and domestic technology content. Third, foreign direct investment suppresses the promotion of total technology content. Forth, human capital promotes the domestic technology content. Fifth, the development of the financial sector promotes both the total technology content and domestic technology content.Finally, in order to upgrade the structure of China’s export products, we must continue to actively participate in international vertical specialization division, make reasonable introduction of foreign capital to make better use of FDI spillover effect, establish a long-term effective mechanism of promoting human capital, increase the investment in research and development, improve the domestic enterprise’s independent innovation ability, deepen financial system reform and improve the efficiency of the financial industry, increase the rate of the domestic procurement of intermediate products.