The International Component Analysis Of The Industrial Economic Fluctuations

In recent years, with the continuous growth of industrial output, China has become a veritable industrial countries, in some important industrial area, products has reached world advanced level. However, in the time of rapid development of China’s industrial economy, there are some deep-seated problems and contradictions. For example, since2010, the cumulative growth rate of value added of industrial enterprises and PPI has been in a state of slow decline. Through the analysis, the negative growth of PPI is not caused by deflation, the fundamental reason is overcapacity. And after he2008subprime crisis happened, China’s industrial overcapacity is due to foreign economic downturn, shrinking international demand, lower foreign investment.In summary, the international demand situation of industry has significant knock-on effects on China’s industrial overcapacity, PPI and the economic benefits of the industry, That is to say, the international impact of economic fluctuations has an important role on China’s industry economic development.Most of the existing literature international about economic conditions affecting industrial development is conducted in two ways, On the one hand:measuring the impact of the international economic fluctuations on industrial exports trade; On the other hand:analysis the negative impact of the U.S. subprime mortgage crisis on China’s industrial economy. Therefore, there is still room for improvement about the existing literature in terms of research.In this paper, we extracted60-dimensional set of macroeconomic information from CEI and other five databases, and establish FAVAR model with three international factors. And calculating the international factors, domestic factors and firm heterogeneity factor affecting China’s industrial economic fluctuations. According to the estimation results, we calculating the degree of influence and industrial sustainability on China’s economic development.And on this basis, according to the impulse response function, we reveals the Dynamic Impulse Response on industrial output, efficiency, scale about three international factor markets, in order to provide theoretical and practical significance in terms of how to deal with international impact on China’s industrial development. The main conclusions are as follows:Firstly, using principal component analysis, we extract seven unobservable domestic macroeconomic factors from the60-dimensional macroeconomic information, with three international factors were composed of macroeconomic factors. Macroeconomic factors explained85%of variance in all macroeconomic variables. that is to say, macroeconomic factors can explain the absolute change in macroeconomic variables, can fully reflect the basic characteristics of the macroeconomic dynamic operation; And according to the goodness of fit and correlation coefficients for potential factor and macro variables, we can analysis the macro information that each potential factor matters covered.Secondly, by estimating the FAVAR model, we can obtain the total macroscopic composition, the domestic component composition, international impact, and Heterogeneous impact that influence Industrial economic fluctuations. we can concluded that:(1) Total macroeconomic component explains the vast majority of industrial output than Heterogeneous impact; In different periods, international factors have different effects on different industry economic indicators.(2) Through continuous analysis, we can concluded that fluctuations of domestic and international macroeconomic have a longer impact than heterogeneous impact on China’s industrial economic.Thirdly, according to the proportion of international ingredients on industrial economic volatility in FAVAR model, we can measure the extent of the impact of international factors on industrial development in four periods (prior to joining the WTO, between join the WTO to the subprime crisis, the American subprime mortgage crisis period, periods after the financial crisis). the estimation results are:14.99%、49.56%、70.45%、51.8%, it could be basis for identifying the impact of international effect in different period.Finally, In order to analyze dynamic impact effect on the development of the industrial economy of three international factors(industrial export trade conditions, industry FDI conditions, China’s international trade environment), we measured the impulse response on industrial production, efficiency, scale, market. We can concluded:(1) Industrial export trade situation, the international trade environment has a positive effect on industry production levels, economic efficiency, market size.(2) Because of low innovation capacity of the industrial economy, irrational industrial structure, at the beginning, the dynamics impact effect in China’s industrial economic production of FDI is negative. After we promoting industrial upgrading and transformation actively, increasing innovation capacity, the effect becomes positive.