Research On The Development Of Foreign Trade Of Characteristic Local Products In China

Adam Smith wrote in "The Wealth of Nations" when it comes to the causesof division of labor:a man almost always needs help from his compatriots, which is not completewith good will alone, but can only be obtained through contracts, transactionsandpurchases. A man has the habit of transferring an item and exchange it with others by nature. This pleasant behavior only comes from human nature and no other explanation. If one kind of labor requires more than usual proficiency and skill, then, out of respect for the people of this ability, a higher value than the given amount of time spent shall be given to the products produced by people with this special ability which needs long time to form, giving their products a higher value is only necessary for the time spent and a reasonable remuneration of workers.It is based on this inspiration that I choose the Characteristic Local Products (CLPs) which is common in local place but has no clear classification in the statistical system as the research subject in the study of the international merchandise trade. I begin with the definition, classification, history and development of trade practices of CLPs and take the literature review, empirical analysis, research, theoretical discussion as the methods to study the development of China’s foreign trade of CLPs. The aim of the study is to boost the production of the CLPs by developing the foreign trade of CLPs, promote local economic growth, increase employment opportunities and improve the income of labors. At the same time, to seek more waysfor China’s economic development and industrial restructuring.The thesis includes eight parts:The first part is the introduction, which deals with background, purpose, significance, ideas, object, content and data of the research; explains the methods of the researchand structure of the paper; concludesthe innovation and difficulties in this paper as well as deficiencies that exist.The second part reviewsthe literature and theoretical basis of the study of foreign trade of CLPs. The third part analyzes the valuecomposition of the CLPs, and introduces the international Trade form of CLPs; the fourth part is a dynamic analysis of CLPs’development of foreign trade, in which the developmentof foreign trade of CLPs were reviewed and the exportsof main CLPs were predicted.The fifth part describes the change of the structure of China’s foreign trade and concludes that although the proportion of primary products in China’s total exports decreases rapidly, the share of the export of CLPs in primary products export is relatively stable. The sixth part is an empirical research on the impact of the export of the CLPs on the economic growth; In this part Icalculatethe contribution of the exports of major CLPs to the economic growth rate, and estimate the driving effect of the export of CLPs on export trade; the seventh part detailed the factors affecting the development of China’s foreign trade of CLPs; in the eighth part, some suggestions are put forward to develop the foreign trade of CLPs in China.The conclusions of the thesis are:Through reviewof literature in the research on the CLPs, the thesis summarizes the theoretical basis for the development of trade of CLPs. The Theory of Advantage is the basis of the trade of CLPs; the Theory of Factor Endowments is a prerequisite to the CLPs trade; Modern New Theory of Factors of Production is a new concept of CLPs trade; Contemporary New Trade Theory is the guiding ideology of CLPs trade; Innovation Theory provides ways for the development of CLPs foreign trade; and Market Competition Theory provides CLPs foreign trade with macro environment.Based on the reference and analysisof historical documents, the value composition and market position of CLPs are established. The definition of the CLPs, its value and influence factors. After that, the form of the foreign trade of CLPs is described:setting the ’CLPs trade’as a sample, to build aCLPs trading framework which integrating merchandise trade, trade in services and trade in intellectual property as one so that a huge industrial chaininvolving the second and third industry can be formed, thus regional industry can be boosted and the region economy, even the whole country’s economy, can be can be promoted.By the use of auto-regressive moving average (ARMA), the dynamic change of the CLPs is analyzed. The conclusion is that with the gradual sublimation of the social development, people will show steady growthin demand for products that containing rich and profound historical and cultural connotation. In the early years of the People’s Republic of China, CLPs trade was the main parts of China’s foreign trade and occupied an indispensable position. But after China’s reform and opening up to the world, with the decline of the share of the exports of primary products in total exports, the share of CLPs in total exports has also been declining. However, compared with the primary products, the rate of decline of CLPs is relatively slow and stable.However, by examining the structure of the foreign trade of CLPs in China, it can be seen that with the gradual deepening the opening of China’s economy and improving of the structureof export products, the primary product is no longer a major part of China’s exports. Although the proportion of primary products in China’s total exports decreases rapidly, the share of the export of CLPs in primary products export is relatively stable. With the fast development of modern agriculture, agricultural exports (garlic, apples, etc.) increase rapidly, and gradually become an important part of China’s export of CLPs. The distribution of CLPs is not even, and the sequence of the product value of CLPs is often related to the number of CLPs and geographical signs.Whileestimating the parameterswith maximum likelihood method, the Kalman filter test can be used to attain the graph of the Effect of the Foreign Trade of CLPs on the total exports. The results show that, during theyearsof 1964-2004, the marginal effect of CLPson China’s total exports is relatively stable with slight fluctuations between 0.8264 ～0.8564; from 2004-2011, especially after 2008, the fluctuation has been increasing. Overall, the marginal multiplier effect ofCLPs on China’s total exports fluctuates between 0.7373-0.9620. This shows that if the export of CLPs increases$ 100 million, the country’s total exports will increase $73.73～96.29 million. With the continuous development of China’s foreign trade, the marginal multiplier effectof the foreign trade of CLPs will rise slowly.