East Asia Production Network Labor Division’s Influence On China’s Manufacturing Industrial Competitiveness

The East Asian Production Network, a manufacturing vertical division productionsystem based intra-product specialization, rides in the nineteen nineties in East Asiaeconomic circle. China’ manufacturing industry integrated into the East Asian ProductionNetworks with cheap labor cost and a series of preferential policies, and quickly becamethe main assembly center in the network. This kind of sophisticated division gives China’smanufacturing industry full play to its comparative advantages, has profound influence onChina’ manufacturing industry.This article studies China’s16manufacturing sectors’ integration degree in the EastAsia Production Network from1997to2011with vertical specialization index, analysesthe influence of the production network in East Asia on China’s manufacturingcompetitiveness from different angles based on Michael Porter’s―Diamond Theory‖, andconducts quantitative analysis on it using panel data with consideration of manufacturingfactors (technology, capital, labor). It turns out that East Asia Production Network doesenhance China’s manufacturing competitiveness, but the influential degree depends on theindustrial factor intensity, especially to technology/capital-intensive industry and labor-intensive industry, also different factor (technology, capital, and labor) influencesdifferently. China’s manufacturing business needs urgent industry upgrading and shouldtake full advantage of technology and capital, otherwise, as the degree of China’sinvolvement in East Asia’s production network goes deeper, China’s manufacturingindustry will fall into the―comparative advantage trap‖, and it will inhibit China’smanufacturing industry from further development.