Research On Intra-product Trade Of Mechanical And Electronic Product Between China And South Korea

Since the 1970s, with the advancement of science and technology revolution and the rapid development of economic globalization, many significant changes have taken place in international trade; one of the most important changes is the global production collaboration which is based on vertical specialization. It makes the production which was gathered in a country or a region before now scattered in different countries, each country driven by the target of profit maximization focus on some parts or components’production according to their own comparative advantages, which changes the international division of production from inter-industry, Intra-industry to intra-product by the industry. The intra-product trade which is based on the production division within products also becomes one of the hottest topics in the current international economic.Since reform and opening-up, our country implemented a lot of policy attracting foreign investment, and at the same time relying on cheap labor resources, rich in natural resources, the advantages of the broad market, our country undertake a large number of production capacity from the South Korea, Singapore, Taiwan, Hong Kong,China and other emerging industrialized countries and regions. So we participate in the intra-production specialization with the form of processing trade, and promote the rapid development of foreign trade and economy. Based on this, as the important trade partners, China and South Korea’trade contacts are more frequently. Now, China has become the South Korea’s the biggest trading partner, the largest export market and import source, and South Korea is China’s third largest trading partner, the largest import source and the fourth largest export market. Among them, the mechanical and electrical products trade in the bilateral trade volume proportion from 12.53% in 1992 rose to 61.87% in 2014 became the first categories of products in the bilateral trade. At the same time, China and South Korea’s trade pattern also gradually changes from inter-industry and intra-industry to intra-product, and more and more important in the bilateral trade. And as the first categories of the bilateral trade, the mechanical and electrical products depending on its characteristics have become one of the most important parts of the trade development between China and South Korea.In view of the important position of South Korea in our country’s foreign trade and the importance of intra-product trade of mechanical and electronic products between China and South Korea, this paper decided to take the mechanical and electronic products as an example to study the intra-product trade between China and South Korea.The first chapter is the introduction, elaborated this article’s research background, research significance, reviewed the research progress of intra-product trade at home and abroad from the produce, measurement method, influencing factors and economic effect, introduced the research contents and possible innovation points and deficiencies.The second chapter introduces the concept of the mechanical and electronic products and the basic theory of intra-product trade, including the concept of intra-product trade, the measurement method of intra-product trade and the theoretical basis of intra-product trade.The third chapter analyzed the status quo and characteristics of intra-product trade in the mechanical and electronic products between China and South Korea, including the bilateral trade situation between China and South Korea, the status quo and characteristics of intra-product trade in the mechanical and electronic products between China and South Korea. Through the data analysis we can find, the trade development between China and South Korea is rapid, and the trade between two countries is given priority to mechanical and electrical products, but our country is always at the disadvantage with the trade deficit. The mechanical and electrical products trade between China and South Korea is given priority to intra-product trade. The intra-product trade of mechanical and electrical products on one hand has a promoting effect on the bilateral trade; on the other hand the deficit of mechanical and electrical products within the product trade is the main source of the overall trade deficit between China and South Korea.The fourth chapter is the important part of the article. In this chapter we want to measure the level and added value of intra-product trade of mechanical and electrical products. At the same time we want to analyze the competitiveness of China and South Korea in the mechanical and electrical products and components, we also compare the production and assembly advantages of China and South Korea in the mechanical and electronic components, In recent years, with the increasingly closer of economic and trade relations between China and South Korea, the level of intra-product trade of mechanical and electrical products has reached the high-level. The growth rate of added value obtained from intra-product trade of mechanical and electrical products trade between China and South Korea is increasing gradually and now it has exceeded the growth rate of mechanical and electrical products trade between China and South Korea; At the same time the competitiveness of mechanical and electrical products especially the production advantage in China are rising. But, the proportion of added-value in our country’s mechanical and electrical products export share is still too low. Compared with South Korea, our mechanical and electrical products and mechanical and electrical parts is still at competitive disadvantage, our country is still mainly participate in the division of intra-product between China and South Korea by assemble advantage.The fifth chapter analyzes the influence of the labor cost, geographical location, industrial structure factor, multinationals on intra-product trade of mechanical and electrical products between China and South Korea. China’s low labor cost advantage is declining, but the near geographical position, the differences between the industrial structure and the development of the multinational companies promote the intra-product trade of mechanical and electrical products between China and South Korea.The sixth chapter reaches conclusions and puts forward the relevant countermeasures and suggestions according to the previous analysis and research.There are two main innovation points in this paper:firstly, the research angle is new. South Korea is China’s important trading partner, but the direct study of intra-product trade of mechanical and electrical products between China and South Korea is not much at home and abroad. Secondly, the research method is new. This paper uses the vertical specialization index method to measure the intra product trade level and based on it, we infer the formula and calculate the added value of intra-product trade of mechanical and electrical products.However, in the study of the impact factors of China and South Korea’s electrical and mechanical products trade, we only analysis based on the data, not using the measurement model to check, which is the defect needed further study.