The Impact Of International Fragmentation Of Production On Sino-US Trade Imbalance

In recent years, along with the constantly improvement of the degree of China’s trade liberalization and export activity as well as the rapid growth of GDP, China’s foreign trade has maintained rapid growth as a whole, and also appeared the situation of the regional trade imbalances, especially to the U.S. trade imbalances. Take this opportunity, the U.S. is frequently criticized China for its lack of fairness and sustainability in the marking of trade policies and trade contacts, and they believe that trading with China has raised the rate of the country’s unemployment, reduced the international competitiveness of their products and blocked the benign development of their economy. Consequently, the trade frictions between China and U.S. are increasing dramatically on the issues of the RMB exchange rate, textile special safeguard, anti-dumping and anti-subsidy and so on, especially after the finical crisis of 2008 when trade disputes between the two countries is escalating. The Sino-US trade imbalance is increasing considered as a major threat to the healthy development of Sino-US economic and trade relations, and even to the stable operation of the global economy.This paper maintains that the Sino-US trade imbalance is mainly characterized by regional and structure imbalances, which primarily determined by the triangular trade pattern of “East Asia-China-US” formed in the current system of international fragmentation of production and China’s special position in it. On the surface, China’s trade surplus with U.S. expands because China makes full use of the advantages of domestic labor resources to actively participate in the regional international division of labor, and makes a great profit through export trade in the system of international fragmentation of production. However, China only plays the role of assembling and processing base and export platform, and obtains a very small part of assembling and processing costs.Thus, in order to reveal the true source of Sino-US trade imbalance, this paper firstly qualitative analysis the current situation of trade balance of China to the U.S., the U.S. to China, and each of them to East Asian economics respectively from the overall trade level, which drawing a conclusion that the Sino-US trade imbalance is mainly characterized by regional and structure imbalances. Then, this paper, under the background of international fragmentation of production, studies the influence mechanism of the triangular trade pattern of “East Asia-China-US” to Sino-US trade imbalance through calculating the triangular trade index, and also makes the example of the most typical trade of Apple’s iPhone between China and U.S. as an added. Finally, it also emphasizes the study on the impact of various factors in the system of international fragmentation of production on Sino-US trade imbalance through building dynamic panel data models about the triangular trade. The results show that:(1) The continuous increase in China’s trade surplus with the U.S. is a long-term dynamic process of accumulation, which is closely related to the rapid development of international fragmentation of production.(2) Although the impact of exchange rate on China’s trade surplus with the U.S. still exists, it is not the only key factor in the system of international fragmentation of production.(3) As a trade hub in the international production networks of East Asia, China imports parts and components from EA economics such as Japan and Korea will expand the bilateral trade deficit significantly, especially in the ICT industry. Therefore, as long as China still keeps the same role in the international fragmentation of production, the situation of Sino-US trade imbalance will continue.