Research On The Industrial Upgrading Of Processing Trade In Shandong Province

The global financial crisis still has its impacts on the world economy as well as on China. China can no longer carry on its average annual growth of 10% under this situation. Restructuring, rearrangement and upgrading of its patterns of economic development will become the future “New Normal” forms. In fact China’s economy has entered an era of more complexity and combination of reforms. Uncertainty and risks are increasing. On the Top Economic Work Conference of 2014, the term "three overlay" of "transition of the growth rate from high to mid-high, painful restructuring of the economic patterns and implementation of the pre-stimulus policies" could accurately describe the current China’s economic development. Therefore how to find a breakthrough in economic development is an issue great significance at the moment.If Shandong, standing at the top provinces of GDP growth in China, could work its way out under the current complex internal and external environments, it could set a sound example for the other provinces in China. Heavily relying on processing trade as the engine of its economic growth Shandong will be challenged to adopt its positions to the changing global value chain with the increasing inflow of foreign capital. Actually Shandong does need switch its pattern of development to meet the increasing domestic demand and rising levels of demands by upgrading itself to the domestic and global value chains proactively and coordinating its forms of development to the world economy.After the author has done a comprehensive research on the current processing trade industry, based on the input-output table, she conducted a quantitative analysis on the depth of Shandong’s processing trade inserted in global value chain as well as in the domestic value chain. Besides, the author also tries to figure out the major factors which work on the final position of Shandong processing trade in the global value chain. Accordingly with further empirical analysis, the author selects the leading industries of processing trade in Shandong and suggests specific upgrading paths and corresponding countermeasures for the development of processing trade.It mainly consists of four parts.Chapter 1: Introduction. This part mainly includes the research background and target, the methodology and major subjects. It also introduces the creative pointsChapter 2: The theoretical review and literature review. First of all, it defines relative confusing concept, and then respectively summarize the related literature documents about industrial upgrading in the global value chain and domestic value chain, finally, it summarized previous research in this area.Chapter 3: The empirical analysis of the upgrading of processing trade industrial in Shandong Province. Firstly, It focus on the following 4 aspects: total trade number of processing trade, methods of trade, export trade structure, trade structure of main body to conducted a preliminary understanding of the overall situation of processing trade industry in Shandong Province. Secondly, by choosing the 15 large representative processing trade industry of Shandong Province and based on the 2002 and 2007 input-output table, it measured the level of domestic value chain and global value chain of the 15 major industries. Thirdly, from different angles, this paper also confirmed the degree of the Shandong processing trade in the global value chain and domestic value chain and made a brief explanation of the reason. After that, it uses improved sensitivity coefficient and influence coefficient of the leading industries in Shandong Province to conduct empirical estimates. Finally it puts forward specific industrial upgrade path according to the actual position in GVC and NVC of the leading industries in Shandong Province.Chapter 4: The suggestions on how to accelerate the upgrading of the industrial in the processing trade. According to the current situation of the industrial structures of processing trade in Shandong and the empirical research, it puts forward some suggestions from 3 aspects: improving the ability of independent innovation, co-ordination of regional development and upgrading of domestic value chain to give some policy suggestions of upgrading of processing trade industry.