Wang Vertical Specialization and Trade Surplus in China

1. Auflage 2013
ISBN: 978-0-85709-447-6
Verlag: Elsevier Science & Techn.
Format: EPUB
Kopierschutz: 6 - ePub Watermark

E-Book, Englisch, 204 Seiten

Reihe: Chandos Asian Studies Series

The traditional flow of goods from primary production through to manufacturing and consumption has expanded across international borders conterminously with globalization. Vertical specialization (VS) in processing and manufacturing in China has driven export growth. In particular, intra-industry and intra-product trade between China, the US and East Asia has increased China's trade surplus over the long term. Vertical Specialization and Trade Surplus in China aims to measure the level of VS in the Chinese manufacturing industry to provide a more accurate representation of China's trade surplus, and gives empirical analysis on provinces and products with important VS activities in order to assess China's trade value-added. Exploring the vertical division of labour, and foreign direct investment (FDI) driving China's import and export imbalance, the book is divided into eight chapters, each covering an aspect of VS in China. The first chapter outlines the aims and method of the study. Chapter two covers VS trade pattern and trade surplus. Chapter three looks at FDI and the import and export imbalance, and chapter four covers the relationship between VS and import and export of foreign invested enterprises. The fifth chapter considers the causes and prospects for growth in China-US and China-Japan trade. Chapters six and seven give an empirical analysis of VS and trade surplus, and a breakdown of VS per industry in China's provinces. Finally, chapter eight considers rebalancing imports and exports in China. - Measures VS across China including the developed provinces based on the newest input-output table - Presents the main provinces and products closely related to VS - Gives evidence on global VS trade patterns from China's national data

Wei Wang is a Professor at the School of Chemical Engineering at Sichuan University, PR China. He received his B.S. and Ph.D. degrees from Sichuan University in 2007 and 2012. His research interests include microfluidics, interfaces, and functional materials. He has published 150+ papers in peer-reviewed journals and written 10+ invited book chapters. He has received many honours and awards, including the Emerging Investigator 2014 of Lab on a Chip (The Royal Society of Chemistry), the Hou Debang Chemical Science and Technology Award - Youth Award issued by the Chemical Industry and Engineering Society of China (2017), Second Prize of the State Technological Invention Award (2018), and First Prize of the Sichuan Provincial Science and Technology Progress Award (2015, 2020).

Autoren/Hrsg.

Wang, Wei

Leseproben

2 Vertical specialization trade patterns and China’s trade surplus
Abstract:
The fact that China is enjoying a trade surplus reflects its position in the vertical division of labor at the current stage. China cannot develop without interacting with the markets of developed economies; it needs to develop bilateral trade relations. Furthermore, increased imports from developed economies with which it has large trade surpluses will help China handle trade disputes and correct trade imbalances. The geographical distribution of trade surpluses among three optimized trade development zones in China displays the differential pace of regional trade growth, both across provinces and across three trans-provincial areas. Key words Vertical specialization Trade pattern China Trade surplus Western markets Regional disparity China’s trade: more and more centered on trade surplus
In the last few decades China’s centrally planned economy has been transformed. Since the adoption of its reforms and opening-up policy, China has built a better reputation for its export products, through technological convergence and innovation. Taking scientific development as its theme and an accelerated transformation of export-oriented trade patterns as the main focus, China’s commodity export structure shifted from primary products to an emphasis on manufactured goods. In the new millennium, strategic emerging industries have become a significant force for leading trade development. Over the past 30 years or so, China has seized the opportunity to develop mutually beneficial multilateral and bilateral trade and economic relations and consequently enjoyed a trade surplus. The Chinese balance of payments may be represented in a three-stage evolution process: 1. The first stage (1978–1989). There was a certain amount of deficit in China’s balance of payments. In 1989 the total value of China’s imports and exports reached USD 111.68 billion, five times as much as that in 1978. During this period, the value of China’s accumulated trade deficit was USD 46.8 billion, averaging an annual USD 3.9 billion and accounting for 5.4 percent of the trade total. 2. The second stage (1990–2004) saw the establishment of a trade surplus. This stage was mainly represented by growth in exports overtaking that of imports, turning the overall deficit to a surplus in trade. During this period (except 1993) China’s accumulated trade surplus was USD 393.1 billion, averaging an annual USD 24.6 billion. When measured by export as a percentage of GDP, it increases from 6 percent in 1980 to 34.2 percent in 2004. 3. The third stage (2005–2010) aimed at promoting balanced growth in imports and exports. In 2005 China’s trade surplus reached USD 100 billion for the first time. In 2008 China’s trade surplus hit the highest point in history. In 2009 and 2010 China’s trade surpluses were down 34.4 percent and 4.2 percent year-on-year respectively. In 2010 China’s trade surplus accounted for 11.6 percent of the total export volume and 3.1 percent of GDP. Vertical divisions of labor driving China trade
The fact that China is enjoying a trade surplus reflects its position in the vertical division of labor at the current stage. Yet whilst China is considered to be the manufacturing base of the world, its trade surplus consists of manufactured goods. As indicated in Figures 2.1 and 2.2, the sharp rise in the trade surplus is a result of the establishment of a program for processing and assembling industrial products. Figure 2.1 Processing trade and total value of trade USD: 100 million.
TT: total trade volume PT: processing trade volume Source: Author’s estimates based on China Customs Statistics and China Statistical Yearbook. Figure 2.2 China’s trade surplus USD: 100 million.
BT: balance of total trade BCT: balance of conventional trade BPT: balance of processing trade. Source: Author’s estimates based on China Customs Statistics and China Statistical Yearbook. With the evolutionary path of integrating globally, there has been a great change in the nature of China’s trade pattern. As a burgeoning international division pattern, VS explains the expanding imports and exports in China. With a rich labor advantage, China participated in production fragmentation. Moreover, China plays an important role in the East Asia production network, switching over, that is, between intra-regional intermediate goods and inter-regional final goods. If we consider China’s production and trade characteristics, it will be found that China’s competitiveness in high-tech products focuses on labor-intensive production stages with low value added. Moreover, China’s exports have evolved with foreign-invested enterprises (FIEs), changing from “bilateral trade” into “triangular trade” with Japan, other East Asian economies, the US and the European Union (EU). As VS theory indicates, imports have made a greater contribution than exports to China’s growth. The effects of VS on the trade surplus derive from imports of advanced technical equipment, raw materials and energy, and key parts and components. Imports of intermediate input play a positive role in firm-level innovation, which highlights the importance of dynamic gains from trade. China has a comparative advantage in labor and transaction costs which encourages FIEs to operate under this export promotion regime. In the course of integration into VS, China has clearly upgraded its value chain, focusing on the assembly stage, while western economies concentrate on R&D and marketing stages with high returns. Thus, the lessons of VS differ between China and western economies: China accumulates experience in assembling, while western economies get the opportunity to develop their advantages in R&D. China relies heavily on western economies’ markets in key parts and components. According to this pattern, China’s trade surplus is particularly vulnerable to external shocks. China’s trade is still dependent on western markets for final goods exports
The economic reform and opening up in China represents a fundamental change, which constitutes a necessary step to establishing trade relations with countries and regions. The US, Japan, the EU, and ASEAN have become China’s major trading partners. As indicated in Figures 2.3 and 2.4, trade relations with the EU, the US and Japan are important to China. The EU was the most important export destination from 2007 to 2010. The US was the second most important export destination over the same period. Their share of China’s exports has generally been around 40 percent over the past few years (the leading export markets for China). Figure 2.3 Value of exports by country (region) of destination from 2001 to 2010 USD: 100 Million.
TV: Total value Source: Author’s estimates based on China Customs Statistics and China Statistical Yearbook. Figure 2.4 Value of exports by country (region) of origin from 2001 to 2010 USD: 100 Million
TV: Total value. Source: Author’s estimates based on China Customs Statistics and China Statistical Yearbook. By 2011 the US was the most important single-country market for Chinese exports, moving up from third largest in 1996. Japan received the third largest share, importing more than twice as much as the next largest importer of Chinese goods, South Korea. Japan was the fourth most important export destination in 2008. In 2009, ASEAN displaced Japan as China’s fourth largest export destination. The top 10 largest trade partners provided 76 percent of China’s imports and exports by the end of 2010. As indicated in Figures 2.3 and 2.4, in recent years China’s main export and import partners are the EU, US, and Japan. The EU is China’s biggest trading partner. China is the EU’s second trading partner, behind the US, and the EU’s biggest source of imports by 2011. China’s exports to the EU are mainly industrial goods: machinery and transport equipment, miscellaneous manufactured articles. China’s goods imports from the EU are also concentrated on industrial products: machinery and transport equipment, miscellaneous manufactured goods and chemicals. The US is China’s second-largest export market; China is third-largest export market of the US. Japan is the largest importing country to China with 14 percent of total import value in 2007. In 2009, China’s imports from Japan decreased 11.6 percent. Though imports from Japan declined for the first time in eleven years, China displaced the US as Japan’s largest export destination. The EU’s presence in China’s exports has also been increasing since 1998 and therefore the US and the EU remain the important...