The Status Of Chinese Manufacturing In The International Vertical Specialization Division System

Now days, countries in the world are linked by global production sharing and integrated into a huge international vertical specialization system. In this system countries are in different location, play different roles and the status is different. Based on value added, a new angle, this study discusses and analyzes China’s manufacturing international division of labor status.As Chinese manufacturing is integrated into the international vertical specialization system deepening and deepening, its export grows rapidly, and has the obvious characteristics of vertical specialization:exported good contains much value created by other countries. Under such circumstances, the traditional measures of international division of labor lose generality. How to correctly measure China’s export scale and reasonably judge China’s status in the international division of labor are currently important topics. In this paper, under the general equilibrium framework, based on the measurement and analysis of "value stream", the author analyzes Chinese manufacturing’s international division of labor status in the international vertical specialization system. The structures and contents of this article are as follows:Chapter1is introduction. In this part, the author elaborates the research backgrounds and significances of this topic and summarizes the related researches, and then puts forward research perspectives, introduces the research framework and methods, major innovations and some directions for further research, and explains the dates this dissertation mainly used.Chapter2is theoretical basis. This part introduces the bases and motivations of vertical specialization, and builds a general equilibrium analysis framework of two countries, two goods and two factors to analyze the changes of division of labor, trade and value added in the vertical specialization. Theoretical analysis shows that factor endowments are still the bases of vertical specialization; countries abundant in capital will specialize in capital-intensive production stage and countries abundant in labor import the intermediates produced by capital-abundant countries, and are engaged in labor-intensive production stage such as processing and assembling to produce final products for export. When the price of final product rises, the value added share of labor-abundant countries will reduce, that is to say, countries engaged in production of downstream have disadvantages in the vertical specialization.Chapter3is focused on the bases for China’s manufacturing to participate in the international vertical specialization system. In this section, the author elaborates the factors from three aspects:factor endowments, technology and economies of scale, institution and transaction costs. The study shows and finds that labor cost advantage, industry clustering, tariff reduction and preferential policies are incentives for China’s manufacturing integrated into international vertical specialization system.Chapter4is empirical analysis of the degree and the position of Chinese manufacturing in the international vertical specialization system. Chinese manufacturing’s integration into the international vertical specialization is deepening and deepening, and has obvious characteristics of high technology. By outlining the chain of vertical specialization in Chinese manufacturing and mapping manufacturing’s international vertical specialization network, the author analyzes China’s position in the international vertical specialization system. The study shows that:first, the chain is shifting from "triangle pattern" to "EU/US-China-EU/US". Second, the international vertical specialization network is made up of "blocks", and the blocks are connected by major countries in the blocks and the network is dynamic, in which China is more and more important. Third, there are four main sectors (industries):coke, refined petroleum and nuclear fuel, chemicals and chemical products, rubber and plastics, electrical and optical equipment, all of which influence more in the system of international vertical specialization than other industries. Fourthly, the global financial crisis has affected the layout of international vertical specialization network, and may lead to the adjustment of international division of labor.Chapter5is empirical study on Chinese manufacturing’s international division of labor status from the perspective of "value stream". The empirical study includes three aspects:first, the author revalues the scale of Chinese manufacturing exports with the method of trade in value added, and the results show that Chinese export scale shrinks, especially in medium-high&high-technology manufacturing, which reflects China’s status in the international division of labour is not so high as measured with the traditional "total export statistical method". Second, the author measures China’s manufacturing international competitiveness with the index of CA and CTB which are calculated by using the data of trade in value added, and the results show the international competitiveness of China’s manufacturing is mainly embodied in the low technology manufacturing, China manufacture’s international competitiveness level (especially the middle and high technology manufacturing) is rising, but is not so high compared with other major countries in the international vertical specialization system, which proves the fact that Chinese manufacturing’s international division of labor status is not high. Third, the author analyzes factors income by calculating the GVC income. The results show that the China’s total GVC income is increasing and can compete with developed economies such as Germany and the US, but measured with GVC income per capita, factors income of manufacturing, in total or every type of technologies, are lowest compared with other major countries, which shows Chinese gains in the global value chain come from high input, so the division of labor status is not high.The last part is main conclusions and policy recommendations. The division of labor status of China’s manufacturing is rising in the international vertical specialization system, but is still low compared with other countries. Faced with potential adjustment of international division of labor in the post-crisis era, to promote the international division of labor status of China’s manufacturing, the only way is to climb up to the upstream of global value chain and grasp the key link in international vertical specialization.