Research On The Trade Expansion Path Of China

Since the reform and opening up, China is increasingly integrated into the global economic integration, China has transferred herself from a small trade country at the beginning period of reform and openness to the world trading power country, especially after the entry of WTO, the export of China is showing a sustained increasing boom. However, behind the prosperity the problems in the structure of China’s exports have become increasingly prominent, especially when external shocks taking place, China’s export growth will fluctuate acutely. For example, in 1997 the outbreak of the financial crisis in Southeast Asia and the United States in 2008 triggered by the global financial crisis, China’s export growth has dropped significantly, then why China’s export growth is highly vulnerable to external shocks? Obviously, only using the shrinking of external demand to explain the phenomenon is explained by the phenomenon, we did not dig out the essence of the problem. Therefore, we want to understand China’s export fluctuation, we should focus on and grasp the micro structure of China’s export growth, should analyze the pattern and path of China’s export expansion, should find the core factors affecting trade expansion, and furthermore improve China expansion mode and select effective way to promote the sustained and healthy development of trade. So, this paper is based on the analysis framework of new-new trade theory, and hope to interpret the different effect between trade costs and trade expansion path from the perspective of trade cost, combining with two-yuan marginal characteristics of China’s trade expansion in order to provide valuable reference for the future trade policy formulation and approach choose.This paper is divided into six parts, including eight chapters, and research ideas and conclusions of each part are as follows:The first part (the first chapter and the second chapter):this part mainly introduces the background and significance of topics. By reviewing the results of these scholars, we summarize the shortcomings in the study. The present research on the impact of trade costs on trade expansion is mainly based on the analysis of the relationship form the total level. They ignore the influence of different trade cost refinement. We establish this research perspective and build the research framework of this paper. Furthermore we explain the research methods and the innovation points of this paper and the shortcomings and future research directions.The second part (the third chapter):Based on the detailed introduction of new-new trade theory in this part, we analyze the limitations of the traditional trade theory and new trade theory in the study of the problem. They assume that the trade cost is zero, and the product homogeneity and diversity hypothesis is different, so the traditional trade theory lays emphasis on the intensive margin of trade, but the new trade theory focuses on the expensive margin of trade. In contrast, the new-new trade theory considers the trade cost, which is more close to reality. Therefore, based on the new-new trade theory, this paper divides trade costs into fixed trade cost and variable trade cost, which improve the new-new trade theory. Then, we can construct the theoretical model of trade expansion path which is influenced by the different trade costs.The third part (the fourth chapter and the fifth chapter):Based on the assessment of the current measure methods of two-yuan margin in this article, in this part we use two main methods (Feenstra and HK) to measure two-yuan margin of China. Then, we verify the characteristics of expanding trade in China from the aggregate level, regional level and the product level. The conclusion is the expansion of trade of our country is based on the intensive margin mainly, supplemented by extensive margin. Furthermore, by analyzing the virtue of two developed countries, we found that the trade expansion path in developed countries is obviously different from that of China. Developed countries attach more importance to the development of extensive margin, particularly focus on the extension margin contribution of high technology product. Therefore, there are obvious gaps between China and developed countries, and the development of extensive margin still has very large space.The fourth part (the sixth chapter):Based on describing the shortcomings of the direct method measuring the trade cost, we use the improved gravity model to measure the trade cost indirectly. And we select the different time points to analyze the effects of trade cost on the development of trade through the decomposition of trade. We found that the trade cost is a core factor affecting the development of China’s foreign trade, especially after the financial crisis effect the effect is obvious. It also verifies the feasibility of explaining the trade expansion path from the perspective of trade cost and the academic value of this study.The fifth part (the seventh chapter):in this part we make use of the simulation estimation method to estimate the elasticity of substitution and firm heterogeneity parameter. According to econometric model, we analyze the impact on trade expansion path because of the change of the different trade costs. The conclusion is that the effect of fixed trade cost is more significant than the variable trade cost, especially the expansive margin effect on trade. In order to ensure the effectiveness of the model estimation results, we use the previously methods to do robustness test of the model and the test results are consistent.The sixth part (the eighth chapter):this part mainly summarizes the conclusion, and puts forward some policy suggestions. By researching of this paper, we should pay attention to the export of high value-added products, improve the quality of export commodities, improve product diversification development, at the mean time, we should actively implement the development strategy of free trade zones, reduce the export costs, develop more overseas markets and promote the development of the geographic diversification, and by improving the infrastructure, we shall reduce variable trade costs, with the purpose of promoting the trade expansion path to change from the traditional intensive margin growth to the extensive margin growth.