The Influence Of Income Distribution On Import And Export Trade In China

With the high-speed development of economy, the income distribution of Chinais more unequal, the GINI coefficient have changed from0.238in1980to0.447in2008. On the other hand, the country’s import and export trade volume have risenfrom0.038trillion dollar in1980to2.97trillion in2010, an annual growth rate ofabout27%. Currently，China have already become the largest trading nation in theworld, and its trade structure have also changed profoundly. How have the change ofChina’s income distribution had impact on the development of its foreign trade. Andhow the influencing mechanism happened? This dissertation will solve the aboveproblem from two aspects that is the impact of the China’s income distribution on theimport and export trade.The dissertation includes six parts: The chapter1introduces the research’sbackground, purpose, significance, approach and innovation. The chapter2presentsliterature overview, which elaborates the development of the trade theories on demand,the application of nonhomothetic preferences in international trade theories, andcollates the relevant literature studying income distribution and trade. The chapter3isthe theoretical principle and model of the study, illustrating the character ofnonhomothetic preferences in detail, commentating on classical theories on incomedistribution and trade, and establishing the theoretical model based on the theoriesabove. The chapter4and chapter5is the empirical study of this dissertation. Thechapter4studies the impact of income distribution gap on import trade in China intwo aspects. On the one hand, the GINI coefficient of19provinces and cities iscalculated by using the Gini coefficient formula of various length division. And theresearch conducts a dynamic panel analysis of the impacts of income distribution onimport trade value using panel data on Chinese provinces from2002to2008. On theother hand, based on the correlation between household budget shares in China andincome, I classify products into “luxuries” and “necessities”. According to the importtrade data between China and64other countries during1992to2008, the dissertationestimates the influence of income inequality to the structure of import in China by using the FGLS method. The chapter5also researches the impacts of incomedistribution gap on China’s export trade. The first, it calculates the overlap of incomedistribution between China and45export destination countries by nonparametrickernel density estimation, which represents the overlapping demand structure, andconducts the empirical research about the influence of the overlap of incomedistribution over China’s export value. The second, it use the Heckman two stageselection model to estimate the impact of income distribution on the dual margin ofChina’s export based on the6-digit HS export trade goods data from1996to2008.The chapter6is generalization and summarization, enlightenment and policysuggestion.Based on the above researches, the dissertation gets several conclusions: First, theincrease of income inequality will make the import value reduce in autonomousregions and municipals of China. And the lower level of the economic development inthe regions, the greater the influence. In addition, income discrepancies between citiesand villages is the principal factor in the influence of income distribution making theimport trade value reducing. The widening of income distribution gap will reduce theimport from OECD and non-OECD countries, and the impact will be more obviousfor the import from non-OECD countries. Secondly, while the imports of luxuries andthe ratio of luxuries to necessities increase with China’s inequality. Furthermore, themore developed the origin country is, the greater impact of income inequality is onluxuries imports. Thirdly, the larger the overlap of income distribution between Chinaand export destination countries, the more the export value,and the overlap of incomedistribution has more impact on differentiated products than homogeneous products.Finally, income inequality will increase the extensive margin of trade and reduce theintensive margin of trade. In addition, income distribution will impact on the dualmargin of consumer goods and capital goods export, but no influence on intermediategoods.There is less focus on the relationship between income distribution and importand export trade in China, the study fills in the gap, which is helpful to further discussthe development of China’s foreign trade from a new angle.