Study On The Factors Influencing The Performance Of Transformation And Upgrading Of China’s Processing Trade

In recent years, the industry of China’s processing trade not only has beenexploited by developed countries, but also faced with the intense competition fromother developing countries with a lower cost. The comparative advantage of labor isdisappearing. As a result, the transformation and upgrading is imperative. Ourcountry has taken a series of measures to promote the transformation and upgradingsince2003, but the effect is not obvious. The study on the influencing factors candistinguish the influence of different factors and put forward reasonable suggestions,which are help for the improvement of the performance.In this paper, firstly, based on the analysis of the limitation of the traditionalindicator, take the performance of transformation and upgrading to represent theeffect of transformation and upgrading in this paper which consists of twodimensions: the increase of the added value and the promotion of the spillovereffects. Secondly, consider the factors of the performance of transformation andupgrading of processing trade, including human capital, technical level, physicalcapital and environment and policy factors. Thirdly, establish structural equati onmodel of the performance on its influencing factors, and based on the184groups ofdata collected from the top eight provinces in the industry of China’s processingtrade from1990to2012, Model fitting and testing is conducted by SmartPLS2.0,which is on the basis of the verification of the classification of influencing factorsusing confirmatory factor analysis by SPSS17.0.The major conclusions of this paper are as follows: the increase of the addedvalue is significantly higher than the promotion of the spillover effects. The level ofhuman capital and technical level have significant effects on performance oftransformation and upgrading. The effect of environment and policy factors are notobvious and the contribution rate of physical capital is the lowest. As a result, theimprovement of the level of human capital and technical level is the most effectiveway to improve the performance.