Effect Of Exports On Capacity Utilization Of Chinese Manufacturing Industry

Manufacturing industry is the pillar industry of national economy in China featuring a higher degree of extroversion.Export has already become a key factor affecting manufacturing activities.Although in recent years,exogenous comparative advantage of China's export is gradually lost and the financial crisis hit hard t to China's exports,manufacturing development will still dependent on exports in the short term while China's domestic demand has not yet been activated immediately.Therefore,it is of great significance to study the effect of exports on China's manufacturing capacity utilization on the industry level.On the basis of theory of effective demand and international trade,the paper studies the factors which may affect the effect of exports and the mechanism that exports may affect the capacity utilization through the demand expansion effect,industrial association effect,factor allocation effect and technological innovation effect.This paper analyzes the characteristics of export trade of China's manufacturing industry in recent years and measures the capacity utilization rate of 25 industries by production function approach which shows that currently serious overcapacity happened in China's 13 manufacturing industries.Further,based on the China's manufacturing industry panel data from 2000 to 2014,the paper empirically analyzes the impact of export on Chinese capacity utilization of manufacturing industry separately on a whole and industry level.The results show that significantly positive effect of export on manufacturing capacity utilization and different impacts on different type of industries,firstly,exports increase the capacity utilization of labor-intensive industries significantly,while that of capital and technology-intensive industries with no significant increase;secondly,for both homogeneous and heterogeneous industries,exports result in positive effect on the capacity utilization significantly with a much more greater effect on homogeneous industries.This paper suggests that manufacturing exports should be increasingly supported,firms with excess capacity should be encouraged to develop OFDI leading exports,improve the competence in global market by increasing the spending on R&D and raising human capital level in order to improve CU.