Research On The Level Of Intra-industry Trade Of Mechanical And Electrical Products And Its Influencing Factors Between China And The European Union

Since1960s, intra-industry trade theory break through the assumes of traditionaltheories and use economies of scale and imperfect competition to explain the causesof international trade. Then intra-industry trade theory come to a frontier internationaltrade theory while the correlational studies also become important projects. Manyscholars, at home or abroad, devoted to the studies of the intra-industry trade, butmost of the previous studies concentrated on the intra-industry trade among developedcountries, while there’s less studies on the intra-industry trade between developingcountries and developed countries. As for the development degree, China is thelargest developing country while the European Union (EU) is the largest economies.With the expansion of EU and the deepening of China’s reform and opening up, thebilateral trade relations obtain high-speed development. EU go beyond USA andJapan and become China’s largest trading partner in2004.By developing the intra-industry trade between China and EU, we could makeeffective utilization of funds and the technological spillover effects of EU’s FDI inorder to promote technological progress. And it’s also beneficial to improve the statusof China in the international division of labor and promote product structureadjustment and industrial upgrading. Besides, intra-industry trade of mechanical andelectrical products is beneficial to stimulate economic growth, upgrade the structureof bilateral trade and promote bilateral comprehensive cooperation.Based on intra-industry trade theory and related documents, the paper using theconcrete and authoritative statistics, makes a systematic research on the situation ofthe intra-industry trade of mechanical and electrical product between China and EUfrom2000to2012, with the joint methods of static indicators and dynamic indicators.With some index such as G-L index, marginal intra-industry trade index, GHM, tradecompetition index and so on, the paper applies an empirical analysis to estimate the intra-industry trade condition and industrial competitiveness of mechanical andelectrical product between China and EU. As the results showed: for the bilateralintra-industry trade of mechanical and electrical products between China and EU, theoverall intra-industry trade level is very high, and the bilateral intra-industry traderemains vertical intra-industry trade through the calculation of intra-industry tradestructure. The intra-industry trade level in different chapters of mechanical andelectrical products (SITC Rev.3) has large differences. Meanwhile, the contribution ofthe intra-industry trade to trade increment of mechanical and electrical products isgreater than inter-industry trade between China and EU. However, compared withother countries such as Korea and Japan, the competitiveness level of China’s andEU’s mechanical and electrical products is still lower.On the basis of knowing the situation of the intra-industry trade between China andEU, the paper, using relevant data of1990-2012, makes empirical research on theinfluence factors of mechanical and electronic products intra-industry trade viaEviews, and selects per capita income level differences, average size of the marketlevels, the level of opening and foreign direct investment these four explanatoryvariable to establish metrological model and do regression analysis. The mainconclusions are as follows: per capita income level differences, average size of themarket levels and the level of opening have negative impact on the intra-industrytrade, while there is a positive correlation between intra-industry trade and FDI. Thereare some problems existing in the production and export, for example, the extensivegrowth of trade based labor and resource intensive, lower technical level, weakereconomies of scale effect, lower utilization efficiency of FDI, more trade barriers inEU, etc. These problems lead to the lack of competitive advantage of mechanical andelectronic products in the international market, and impede the development of theintra-industry trade of mechanical and electronic products between China and theEuropean Union.Finally, according to the empirical analysis, in view of China’s disadvantages in bothproduction and export of mechanical and electronic products, the author puts forwardsome appropriate countermeasures and suggestions from the macro level and microlevel, and hopes to promote the development of the intra-industry trade of mechanicaland electronic products between China and EU.