The Policy Research On Transformation And Upgrading Of Shanghai Processing Trade

As one of the pilot cities to carry out the processing trade, Shanghai has arapid development of the processing trade since the reform and opening up,depending on the favorable policies, the sufficient and cheap labor force, theperfect infrastructure and the excellent geographical location etc,. We can findthat the trade way of processing trade has been changing from processing withsupplied materials to with imported materials. The structure of the products hasbeen changing from labor-intensive products such as light industrial and textileproducts to capital-intensive and tech-intensive products such as high-techproducts or mechanical and electronic products. With the development ofprocessing trade, local enterprises’ ability of technology and management hasimproved continuously. In a word, the processing trade, as one of the troika todrive economy growth, has taken an important role in pushing forward Shanghaiforeign trade, optimizing the structure of export products and promoting theeconomic and social development.But in a long time, because focusing on OEM mostly, Shanghai processingtrade is facing series issues, which include both ends of the chain are outside, local enterprises are lack of innovation and brand and the added value ofproducts are low. All these factors influence the development of Shanghaiprocessing trade. What’s more, since the global economic crisis, Shanghaiprocessing trade is confronting more serious challenges. From the aspect ofinternational situation, global economy has a slow growth, which caused the fallof external demands. Meanwhile, the surrounding nations are more and morecompetitive in this field. From the aspect of shanghai local development, thecomparative advantages are becoming weaken because of the appreciation ofRMB, the rising cost of labor cost and the shortage of land etc,.In the era of knowledge economy, along with the new round of globalindustrial division and relocation, Shanghai processing trade can still playsignificant role in social economic development, only by grasping theopportunity to foster strengths and circumvent weakness, to accelerate thetransformation and upgrading of processing trade so as to enhance the status androle in global industry chain. As market-adjustment is usually short-term andlagging, government-adjustment is more effective and speedy in the period oftransformation and upgrading. Government should formulate and implementeffective policies to compensate for the limitations and shortcomings ofmarket-adjustment. Only by this way can limited resources be effectivelyallocation and rapid transformation and upgrading be realized.In2013, the central government approved Shanghai to set up “China(Shanghai) Pilot Free Trade Zone”. The China (Shanghai) Pilot Free Trade Zone is creating new mode of supervision and cultivating new trading types andfunctions, aiming to increase China’s competitive advantage and enhance theposition in the global trade value chain by focusing on the development oftechnology, brands, quality and service, which create a good opportunity for thetransformation and upgrading of processing trade of Shanghai. So Shanghai hasalready accumulated new advantages for the transformation and upgrading ofprocessing trade which contain technology advantages, abundant talent, perfectenvironment, as well as pilot policies advantages. We should strengthen thefunction of government-adjustment to realize the transformation and upgradingof processing trade. Firstly, we should improve the policy system to adapt thenew needs of processing trade development. Secondly, we should adjust theindustrial layout to give priority to advanced-manufacturing industry strategicemerging industry. Thirdly, we should optimize the investment environment toattract regional headquarters and R&D centers. Last but not least, we shouldimplement positive fiscal policies to encourage enterprises to invest in R&D.