Study On The Impacts Of Foreign Trade On China’s Industrial Growth

Since joining the WTO on December 2001,China has made great achievement in the field of foreign trade.It has made the economy grow rapidly and brought a huge change in China’s industry.In three major industries,the secondary industry is the pillar industry and has become the main driving force of the economic growth.With the influence of the global financial crisis in 2008,China’s foreign trade development was declined and the industrial value-added output growth was slowed down.China mostly exports labor-intensive products while the high value-added and capital intensive products are relatively few.To change the export structure,it’s necessary to adjust the industrial structure.Therefore,this paper is mainly to study the impact of foreign trade on the development of local industries.The empirical part uses the 2002-2014 national 31 provincial panel data as the empirical research,applies the fixed effects and DID analysis method by the use of Stata 14.0 software.The result indicates that foreign trade respectively in the east,center and west of China are not balanced;the level of trade in the eastern China is much higher than the one in the central and the western;While the external trading environment is worsening,for the provinces with higher dependence on foreign trade,their industrial growth will be significantly dragged down;this result is still valid when applies the geographical distances between the cities and trading ports as proxy indicators of foreign trade dependence.