Expanding Domestic Demand Influences On Upgrading Export Structure Of Chinese Manufacturing Industry

After three decades of Reform and Opening, China has achieved remarkabledevelopment. But we can also see some problems before. With deepening of China’seconomic development and changing of World’s trade structure, export-orienteddevelopment model also shows its own flaws. For example, it may lead to domesticeconomy be over-reliance on foreign economics. In addition, long-term export-orientedeconomic development model also limits the China’s domestic market. In the face of theseproblems, the CPC leaders make political decision that China will make effort to expanddomestic demand and improve people’s income.But we also should see that, the expansion of domestic demand can’t be completedin a short time. Under the circumstances that exports is slowdown and domestic demand istemporarily difficult to replace the exports share in stimulating economy development, weshould consider both foreign demand and domestic demand. We should insist ondeveloping both foreign demand and domestic demand. So that China’s economy canmake positive development. Expanding domestic demand while keeping exports positivecircle, realizing upgrading of China’s export structure, all that can help China make a newgrowth point in the case of deteriorating background of international trade. China will geta more powerful engine in stability and sustainable economic development, if bothdomestic demand and foreign trade are emphasized on.This essay will analyze this problem in the view of domestic market effect theory,and will select manufactory industry that is easy to be affected by domestic marketeffect to be an analytical starting point. Firstly, this essay elaborates meaning ofdomestic market effect. So that readers can have systematic understanding of this theory.Follow this, this essay will further study the being of domestic market effect inChinese manufacturing exports by scatter plots and time fixed effect model. The resultshows that domestic market effect is really existence in Chinese manufacturing exportsand its function intensity is changing with the different industrial sectors. Finally, thisessay will give policy recommendations according to study conclusion：(1)From HMEpremise view: Encourage technology and product innovation;(2)From HME connotation: take policies to stimulate domestic demand for releasing huge domesticconsumption potential;(3) Further promote trade liberalization and take trade policies toimprove terms of trade.