Research Export Policy Financial Impact On China’s Export Trade Structure

The development of foreign trade and optimization of trade structure have been the two themes of world trade in the Post-crisis era. In order to respond to the rapidly changing economic environment, both the developed and developing countries are developing policy framework to support foreign trade, especially export side, seeking for ways for broadening their external markets. As for the measures and instruments countries can deploy, however, the list is increasingly shortened. While the desire for developing its own external trade is equally strong among countries, the use of trade restriction or even trade retaliation has led to the needs of more advanced policy instruments. Policy-based Finance is one of the favored instruments for its advantages in risk hedging and convenience in directing economic structure transformation while it still falls in line with general WTO rules. Given that most countries are playing under WTO rules, the studies on the impacts of Policy-based Finance on the optimization under WTO regulation have received more attention.Optimization of trade structure at national level forms part of economic shifts in China in terms of overall growth of its export trade. The country has benefit a great deal from its export trade development in the past decades and is looking forward to its constant contribution in future economic development. In its recent economic reform, China is intending for industrial structure reconstruction and transformation for sustainable development. It seems clear to the authority that the investment should therefore be more directed to hi-tech industries and industries with higher value-added. The success of the reform would not only create incentives for small-and-medium enterprises development which would in return improve employment, but also help keeping the products and services made in China competitive in external markets. In this sense, China may benefit from making full use of policy instruments on both macro and micro levels.The report is going to first summarize unique characteristics of the export Policy-based Finance in foreign trade including its definitions, its features,functions and operation mechanism. The research involves the use the of data on related credit,insurance and trade. We examined on export practices in Export-Import Bank of China and China Export & Credit Insurance Corporation over the last decade as the research object. After that, we use the unit root test and Granger causality analysis to export status quo policy finance in export’s contribution of trade. Based on the results, we could explore and examine the problems within Policy-based Finance structure in China, followed by in-depth analysis of its internal and external reasons. In accordance to the data and our analysis, the report is to provide advices on adjustment and improvement of China’s export Policy-based Finance.