The Three Margins Of China’s Export Growth: Extensive Margin, Quantity And Quality

Recent research in international trade has focused on the sources of export growth.Export growth will promote a country’s economic growth. The research of ways to exportgrowth and its influencing factors will help to improve the trade structure,and to maintainstable export growth. The recent emergence of new new trade theory ananlyses theheterogeneous firms, which gives a full explanation on the quantity and structure ofinternational trade. Then the export growth marginal ananlysis（three margin: extensivemargin and intensive margin, the latter decoposes quantity and price）based on new newtrade theory gets a lot attention. There have also been many studies about the roles of thethree margins in export growth. But different papers analyze different countries or the samecountry at a different time have different results. As a major ecomomy in the world, since1990s, with the implementation of the strategy of openning up, China’s export growth has ahigh rate. Total exports has leapt to first in the world, but there are few paper about marginalananlysis of China’s export growth, to explore the way of China’s export growth.This paper decomposes the growth of export into three parts: extensive margin, quantityand price, and does an empirical study using the China’s export data in HS-6digit to analyzethe characteristics of China’s export. We arrive at the following conclusions: From1995to2010, if we divide the time period from1995to2010into five even phases, we find the threeparts of the export have different changing trend: the contributions of extensive margin andprice are in a descending trend, but quantity is in an increasing trend; China’ export is betterthan the rest of the world in2008-2010, with a strategy of lowering price and promotingsales greatly in2009when facing the slump of export market and with a measure ofresuming price and increasing sales moderately in reaction to the improving exportconditions in2010.Then,using trade gravity model, we perform an empirical analysis tostudy the impact of trade facilitation and FDI on the three margins. Bilateral trade facilitationhas a significant effect on the extensive margin and quantity margin, with China playing amore important role. But the trade facilitation of the importing country has no significanteffect on the price margin. FDI has significant effect on all the three margins, with the mosteffect on the quantity margin. This paper provides an empirical support for thetransformation of China’s export into diversity and quality upgrading.