The Dynamic Comparative Advantage And "The Belt And Road" Trade Strategy

It has become an inevitable issue to make sure that there is an economic growth without a recession in modern society since the post-crisis era. Although China is developing rapidly, the problems of labor shortage, rising wages and the decrease of demographic dividend can not be ignored. Meanwhile, the international situation is undergoing complex and profound changes, and the deep-seated impact of the international financial crisis is still reverberating. What is more, world economy is recovering slowly, and international investment trade patterns and multilateral trade rules have adjusted profoundly. All this shows that each country is still facing to the serious situation.Chinese President Xi Jinping has propounded the ideas of "the Belt and Road" in Sep.10th 2013. The aim of this strategy is to develop international trade, which can be mainstream ideas in comparative advantage theory. Also, the traditional comparative advantage theory of static analysis framework relies on the constant level of technology and returns to scale, which will be in conflict with the reality of frequent changes in the world. Nowadays, the whole society is experiencing a rapid development of globalization, and regional economic development has become an essential part of it. Furthermore, the rapid flow of information and capital leads us to the era of information economy, and if they continue to use the static theory of comparative advantage to guide the development of domestic trade, the developing countries may fall into the comparative advantage trap. Therefore, the study must start from the perspective of dynamic in order to make better use of theory of comparative advantage.According to extensive research, this essay has explained that all of dynamics comparative advantages are generated from the reconfiguration of resources. Based on the economic hypothesis of elements scarcity, a country could not have absolute advantage in the entire industry, thereby it will manufacture and participate in international division of labor under a comparative advantage. Next, this article reviews the changes since reform and opening up of China’s export trade, and measures Chinese dynamic comparative advantages. The result shows that the comparative advantages in the labor-intensive and resource-intensive industries have been lost gradually, while the comparative advantages in capital intensive and technology intensive industries have been formed. At the same time, the structure of export products is increasingly catching up with developed countries’. In addition, this essay has further analyzed the applicability of dynamic comparative advantage, and it illustrates that the changes of elements can have a better explanation of dynamic comparative advantage.This article has a deep analysis of dynamic comparative advantage, and has summarized as three kinds of capital elements, namely material elements, labor force elements and technology elements. Meanwhile, it has proved that these three elements will lead to cost decrease, output increase and economies of scale expansion, which will determine a country’s trade pattern and increase trade profit. Additionally, it has also proved that as the progress of education and technology, the dynamic comparative advantage will increase as well.Next, this article has studied the trade relationships between China and other countries along the route under the strategy of "One Belt And One Road". According to its requirements, China’s investment in those countries and trading of goods are important ways to realize the export of overcapacity and the optimization and upgrading of industrial structure. Moreover, the key to realize this trade strategy is promoting the efficiency of production. The following empirical study proves that the dynamic evolution of comparative advantage has readjusted the elements of the allocation of resources, which will have a positive impact on increasing production efficiency. Furthermore, the dynamic comparative advantage in China will be more obvious, and trade profit will rise significantly. Finally, this essay also discuss how to improve the dynamic comparative advantage and the approach to realize the strategy of "the Belt and Road".In conclusion, this article has broke through the traditional mold of comparative advantage theory under the background of "the Belt and Road". What is more, it has studied the mechanism of dynamic comparative advantage and the specific factors, which will partially make up for the vacancy of related research in this field. In addition, it is unusual to consider all indexes under one analysis framework. Based on the study, it is clear to see that the strategy of "the Belt and Road" can improve China’s comparative advantage, and the promotion of dynamic comparative advantage provide guarantees for the successful implementation of this strategy.