Determinants Of Competitiveness Of China's Trade In Producer Services

Along with the development of “post-industrialization” economy in western countries,the industries of services gradually became an important part to promote economic growth and advance location of global value chain.As the linkage between services and manufactures,producer services keep driving synergetic development of them.Even though China is the first largest trading country,there are still some problems with trade in services,like trade deficit expanding year after year,and the producer services with high added-value accounting for a small proportion.With the comparative advantage of trade in traditional service created by low labor cost and rich resources disappearing,how to promote the reform and upgrading of China's trade in service and elevate international competitiveness became hot research topic,as well as this paper's purpose.Firstly,this paper analyzes the scale of China's trade in services and producer services briefly: the total volume of china's trade is very considerable.Trade in goods and services add up to US $4.33526 trillion totally in 2017.However,the deficit reached US $239.5 billion,and the deficit in producer services accounted for 26.34 percent,which is an embodiment of the comparative disadvantage of China's trade in services.The smaller proportion of producer services is the main reason leading to the slow upgrading of the structure of China's trade in services.At the same time,these data also reflect the positive side: the export volume of producer services has increased greatly,and the trade deficit has gradually narrowed,which indicated that China's trade in services is developing towards a dominant trend of producer services.Then,based on the World Trade Organization database from 2000 to 2017,this paper analyzes the international market share,revealed comparative advantage,and trade competitive index of China's trade in producer services.The results show that the overall competitiveness of producer services is low and at a competitive disadvantage,but the results vary from industry to industry.MS index shows that China's share of producer services in the international market has risen rapidly in recent years,and surpassed Hong Kong,Switzerland,Singapore in 2017.The RCA index shows that China's producer services are at competitive disadvantage from 2000 to 2017.Vertical comparison of different industries,computer information services,intellectual property rights and entertainment services is competitive.The worst industries are transportation and finance industry,and the RCA index is about 0.5.Fortunately,transport service is growing rapidly in recent years,which is expected to improve the overall RCA level of producer services in China.TC index shows that the competitiveness of producer services in China fluctuates greatly with a slow upward trend.But on the whole the TC index is in the level of less than 0,which means a complete competitive disadvantage.In the third part,this paper introduces all variables with economic theory and data source.The export sophistication is an index to measure the level of technology contained in a country's export products.It relates the per capita income to the proportion of the exports to the world export value and measures the technical content of the export products.This paper deduces the export sophistication of producer services and calculates the value of export sophistication from 2000 to 2017.Other explanation variables such as the scale of trade in producer services,the openness of service market,the scale of trade in goods and the contribution rate of producer services are also introduced.At last,this paper regress the quantitative relationship between TC and all explanation variables,with panel data of 28 countries from 2000 to 2017.The empirical results show that every US $10000 increase in ES will increase export competitiveness by 17.3 percent,and there is a significant positive linear relationship between them,which means not only the increase of export volume,but also the improvement of product quality is also an effective way to enhance competitiveness.The export scale of producer services brings the greatest impact on competitiveness,and every 1 per cent increase in LPS will lead to 7.5 per cent increase in TC.The results of the empirical analysis confirm that the small export scale is one of the reasons why China's trade in producer service is at a comparative disadvantage.There is a significant positive correlation between the scale of trade in goods and TC.Every 1 percentage increase in LGT will lead to an increase of 2.8 percentages in competitiveness.The increase of the scale of goods trade will inevitably increase the demand for producer services.Also,the development of goods trade has greatly promoted the trade volume of transportation services.There is a reverse linear relationship between PSD and TC.Compared with the highly developed industrial manufacturing industry in China,the contribution rate of producer services increased slowly,and the level of specialization was low.The linear correlation between the openness of service market and the competitiveness is not significant.The last chapter of this paper will give the corresponding recommendations according to the statistical analysis and regression results.