Trade And Capital Flows: A Theoretical Model And The Chinese Practice

As the two key components of world economy, international trade and internet investment make more important influence on both each country and the whole world. Especially to China, great increase resulted from entry WTO, study on trade and capital flow have become unavoidable research projects in the process of China opening and reform.China's foreign trade develop with the globalization tendency, which means China must explore her own route, solve her issues with being gradually adapted to the new international rules and customs, and make theory breakthrough. Therefore the article is boring—'Trade and capital flow: theory pagdim and China's practice', which divides the broad definition of "trade to trade"& "capital flow". The article analyses the related problems in both theory and practice and puts this study in the analysis of regional economy difference.The article creatively points out that: (1)There are three features in China foreign trade or three'half: the percentage of processing export to the total export is over 50%, that of export made by joint ventures and foreign business to the total is over 50% and more than 50% FDI to manufacturing industries.(2) The title'big trade country' for China is dabatable. The real trade should be 'big trade' including goods trade, service trade, technology trade and investment, from which point China is not a big trade country and no trade surplus.(3)The four trade strategies must be adjusted to realize 'quantity expansion model' to 'efficiency increase model' .(4)Comparative Study on China and India to put forward the difference and give China enlightment to cross ' comparative advantage trap' .(5)Study on traditional and new trade theories.This article completely analyzes China foreign trade and route choosing. On the basis of deep theory study, some practical suggestions are put out. So it has some guiding function for China development in foreign trade in new era.