A Research On The Dual Margin Of China’s Export To Japan

Since the establishment of diplomatic relations between China and Japan, great progress has been made in bilateral economic and trade exchanges. Japan has always been the most important trade partner and export market in Asia especially after joining in the WTO. However it won’t reflect the essence of trade development just from the increasing of the volume of trade. If the variation of trade cargos was considered, we will get more reasonable explanation of the development of trade. This paper analyses the export development from China to Japan from the micro perspective using the latest theory of international trade and date from United Nations commodity trade database.According to the latest research results of "new-new" trade theory, estimating the dual margins of exporting to Japan from China and analyzing the model of China’s export expansion to Japan. What kind of influence that intensive margin and extensive margin posed on trade growth? Dual marginal decomposition of export trade growth is essentially a kind of structural decomposition:intensive margin is the trade flow caused by quantity expansion of products which have already been exported before, which means that the trade growth mainly relies on the cheap price and large quantities export to achieve. While extensive margin is related to the mutual influence of new market entry and exit the market of export. This part of the export growth mainly through the way of continuous introduction of new products, improving product quality to win more export market share.Firstly, this paper reviews and summaries the literatures on dual margin from domestic and abroad. These literatures in the past are mainly classified into three categories:each export margin contribution for export growth, factors that having influence on the dual margin and the export performance on dual margin. At the same time, comparison and analysis are made on the main similarity and differences between the heterogeneity trade theory and traditional international trade theory according to the latest development of trade theory. Then, this paper systematically introduces the concept, the measurement methods on dual margin under different perspectives. Based on these, this paper choose the overall export scale, geographical characteristics and the export commodity structure to describe the status quo of China’s exports to Japan. The results of analyze show that China’s overall exports growth to Japan below the average growth rate of export growth, and exports to Japan’s overall growth has obvious fluctuation. It means that China’s exports dependence on the market Japan is declining. Mechanical and electrical products, textiles and agricultural products are the top three trade goods Chinese exports to Japan which indicate that there is a strong complementarity between China and Japan on the international trade and a lot of space for trade cooperation between China and Japan.Based on the data of the micro product level of the United Nations commodity trade database, this paper estimates the intensive and extensive margin of China’s overall exports to Japan. Then, the dual margin of top three export goods that are mechanical and electrical products, textiles and agricultural products are calculated separately. The results show that China’s export growth is mainly achieved along the intensive margin. However the contribution of the extensive margin to the export growth is very weak. In view of the abnormal value of the results, the paper deeply analyzes the change of the newly increased export categories, exit market categories and export volume of that year. The main reasons for the abnormal value are that the adjustment of export commodities HS code and the upgrading of the export products, which make the intensive marginal and extended marginal change a lot in specify years.Finally, based on the above theoretical analysis and empirical estimation, the article get the fact that China mainly depends on intensive marginal to achieve the export expansion to Japan. The relevant policy recommendations are put forward. These suggestions include reducing the dependence of price competition, getting the export competitive advantage through product heterogeneity, seizing the opportunity of product upgrading, eliminating low value-added export commodities. If the regional cooperation won’t be achieved in the short term, more effort should be added on the exploring the possibility of bilateral FTA.Try our best to avoid the risk of too concentrated export market through the export market decentralized strategy.