Panal Data Analysis On China-EU Intra-industry Trade In Manufacturing Sector

In recent decades,the development of intra-industry trade(henceforth IIT)is the main trend of International trade that has promoted emerging technological industries and international division of labor.Under "One Belt,One Road" policy,Eurasian economic integration will enhance the development of intra-industry trade in the manufacturing sector.This article will be based on the period of 2006-2017 international trade figures,combining intra-industry trade theory with practice,to analyze the current situation of intra-industry trade in the manufacturing sector between China and European Union which includes nations alongside the Belt and Road.From both horizontal(analogous quality level and differentiated products)and vertical intra-industry trade(different quality level)aspects which are distinguished by calculation using product similarity criterion,through aggregated figures such as the GL indices at 6-digit HS-level data in each 2-digit manufacturing industry out of 22 between China and 28 European countries in the manufacturing sector.To investigate panel models whether the assumption that all sectors are homogeneous(country-specific)holds for this situation and compare to the results by allowing sectors to be heterogeneous(industry-specific),the unrestricted model has been established to address the question of explaining determinants of IIT(eg.differences of GDP,GDP per cap and of mutual exports and imports,geographical distance,R&D and economies of scale etc.).The result shows that 1)the level of China's IIT with emerging European countries is relatively lower than with the EU-15.Objectively there is a need to establish a cooperative platform and lift up the development of IIT among those developing countries.From the product differentiation and diversification perspective,the level of horizontal IIT have higher proportion between China and emerging European countries.2)As the threshold moves a bit,HIIT changes into the positive relationship between DGDP and DGDP per ca.It indicates that China's economies of scale increase globally especially in core business like electromechanical and automobile industries,which will be navigate China through developed countries.3)R&D on Hi-tech is the key to the long-run development of HIIT.Hence,“One belt,One road”strategy will be an important measure of China's new open economy strategy to promote intra-industry trade between developing countries as well as with developed countries.