Empirical Study On China’s Participation In International Intra-product Specialization

With deepening development of third technological revolution, the rapid development oftransportation and information communication technology, the reduction of trade barriers, theenhancement of convenient investment as well as the development of economic globalizationand regional economic integration, the mainstream of international specialization has beenchanged: before the Second World War, the labor division of end-products was among industries;after the Second World War, the labor division of end-products was not only among industriesbut also within the industry; in1970s, it was developed to intra-product specialization. In thisway, the different procedures and links of manufacturing process are dispersed in differentcountries, leading to more careful labor specialization. Because of this labor division mode,developed countries tend to transfer the production of primary components with low added-valueor the labor-intensive processing and assembly to developing countries. As a developing countrywith the largest population, by means of labor-intensive production, China often uses executionand processing trade to participate in the global value chain, becoming a member of internationalspecialization.By means of VSS Index, the author firstly estimates the degree of international intra-productspecialization from2000to2012; by estimating the level of spare parts of China and its major mercantilepartnerships, the author inspects the trade status of intra-product in bilateral trade, comprehensively analyzingthe current status of China’s participation in intra-product specialization; secondly, the author makes anempirical analysis on the impacts of China’s participation in intra-product specialization on employment level,industrial structure and technical level; at last, the author makes an empirical analysis on possible factorsinfluencing China’s intra-product specialization and trade level. The conclusions are as follows:(1) Thecomputing results of VSS Index show that China is with an increasing degree of intra-product specialization,which illustrates that China has stepped into the global value chain. According to the analysis on spare-partstrade of major trading nations, the author concludes that although there is some optimization in China’s exportof spare parts, the position of "world processing factory" hasn’t been changed, while the advantages are still in the low technical level, such as processing and assembly.(2) The empirical analysis indicates that:China’s labor productivity, industrial development and urbanization are with a positive effect onintra-product specialization, while China’s labor wage and foreign trade volume are with anegative effect on intra-product specialization.(3) Intra-product trade can not only promote China’semployment level, but also upgrade industrial structure. What’s more, intra-product trade is with inhibitoryaction to technical level, reducing enterprises’ initiatives in research and innovation.