The Technical Content Of China’s Manufacturing And Its Influencing Factors

Since the reform and opening up,China’s economy has achieved great progress.With the rising of export volume,China’s total exports in 1980($ 18.119 billion) increased to $2.209004 trillion in 2013 and the exports of manufactured goods in 1980($ 9.005 billion) increased to $2.101736 trillion in 2013 which accounting for the absolute position in the export trade.Although China scores high in economic aggregates, but compared with developed countries such as Germany and Japan there is still a large gap in the technological content of export product. China has not yet become a powerful manufacturing country.During the "two sessions" in 2015, Prime Minister Li Keqiang raised "Made in China 2025" strategy in his government work report to build an upgraded version of Made in China.Therefore, with the rising of the cost of labor, land, energy,it’s very important to research on the technological level and structure of China’s manufacturing exports,to explore factors influencing the level of technology exports,to promote the Chinese manufacturing industry.Firstly,Based on the Hausmann (2007) model and the trade data of goods from 1997 to 2013 categorized by SITC (Rev.3) at three-digit level, this study calculate the product sophistication, industrial sophistication,national sophistication of China.The results show that the national sophistication of china has been greatly improved in the past 17 years which increase from $14,418 in 1997 to $20,189 in 2013, achieving a growth of about 40%.China performs outstanding in BRIC countries whose members have similar levels of economic development,but compared with developed countries such as USA and Germany there is still a large gap. What is more,at industrial level, the export sophistication of 25 manufacturing sub-sectors have achieved different degrees of growth in the past 17 years.The technical level of labor-intensive industries represented by extile industry maintains stable development; the technical level of capital-intensive industries and technology-intensive industries have both increased,the structure of China export product has been promoted.However, China is ranked lower compared with the developed countries on the high-tech industry. China has not get rid of the low end of the global value chain links.In addition,at product level, the technical level of typical export products has improved during 1997-2013,the export structure of China has gradually improved.However, China still mainly export low value-added products which have less technical content and rarely export high value-added products (accounted for only about 7%). This proportion is far behind those of developed countries such as USA[27.27]、 Germany[27.27%],even behind those of BRIC countries such as Russia[11.35%]、 India[9.76%].Secondly, this study analyze the factors of Export Sophistication with manufacturing sector’s panel data. The inflows of FDI has a positive role for the export sophistication of China manufacturing export products; Import trade has a negative impact on the technology content of manufacturing export products,this conclusion is inconsistent with the theoretical expectations.This article speculated that imports may cause fierce competition in China which will put pressure on local enterprises and hinder the development of enterprises.The improvement of research and development can improve the technology content of export product;Expansion of industry capital have a significant positive effect on export technological level;High level of human capital can enhance the level of technology content of the export products;The perfect intellectual property rights protection system have a positive effect on export technological level;Cancellation of preferential tax policies for foreign investment hinder the improvement of export technological level.Thirdly, this study classifies industrial sectors into three sub-samples according to input intensity,and separately estimates the effects of these factors in different input-intensive sectors.Conclusions are almost consistent with the estimation. The inflow of FDI can enhance the level of technology content of labor-intensive industries and capital-intensive industries export products,while it has a negative effect on the export technological level of technology-intensive industries.Import trade has different efforts on export technological level in different manufacturing sector.The import trade of labor-intensive industries can promote the export technological level while the import trade in capital-intensive industries and technology-intensive industries will hinder the improvement of export technological level.The increase of R & D can improve the technical level of the three sectors of export products especially the export products of labor-intensive industries.The expansion of industry capital can promote the level of technology content of the export products especially the export products of technology-intensive industries.The high level of human capital and the perfect intellectual property rights protection system can both enhance the level of technology content of the export products of the three manufacturing sectors. Cancellation of preferential tax policies for foreign investment hinder the improvement of export technological level. However, compared with the products of capital-intensive industries and technology-intensive industries, the negative effects caused by the cancellation of policy in labor-intensive industries is not obvious.