Research On Sino-Japanese Intra-Industry Trade Of Telecommunication Products

Japan has been the second biggest trading partner of China these years. Thus, it is quite useful to measure the development of Chinese trade by studying Sino-Japanese trade. Telecommunication products have taken a great proportion of Sino-Japanese trade, so if we want to study Sino-Japanese trade we should not overlook the role telecommunication products played in it. The intra-industry trade, however, has become the hot research point these years for its guidance of innovation and industry upgrading.First we used the static G-L index to measure the level of Sino-Japanese intra-industry trade and then followed the dynamic VIIT and HIIT index measurement of9different sets of goods based on the classification of SITC Rev.3. The results prove that intra-industry trade level has increased steadily with the booming Sino-Japanese bilateral trade. And it also appears that the intra-industry trade is vertical in most of the years for all kinds of goods.Telecommunication products play an important role in Sino-Japanese trade, whether in import or export term. So we focus on the top10telecommunication products and calculate the static G-L index and dynamic HIIT and VIIT. It proves that during the22years the intra-industry level of Sino-Japanese telecommunication product trade has been rising significantly and in all these years the intra-industry trade was vertical. This indicates China has always been on the lower part of international value chain. Though joining WTO has brought great opportunity for both scale of economics and export, the process is not beneficial in the long run. Then we focus on the reason causing the intra-industry trade. First we carry out theoretical analysis from micro and macro perspectives. Then we choose three micro factors:economy of scale, product differences and foreign direct investment together with the G-L index to carry out the econometrics process. The result proves that economy of scale, product differences and FDI all has positive influence on Sino-Japanese telecommunication intra-industry trade. The result is consistent with the theoretical hypothesis.Finally we came to the conclusion that level of telecommunication products intra-industry trade has been rising during the period from1992-2013, and the IIT has always been vertical. Economy of scale, product differences and FDI also has a positive effect on IIT level. We also make some policy suggestions. We should further the process of research and innovation to improve the level of product variety. We should also continue to cut the cost in order to enhance economy of scale. Meanwhile, we need to introduce foreign investment reasonably. Keep the balance of both amount and quality of investments and gradually carry out the strategic transformation of total industry.