Factor Market Distortion And The Transformation Of China’s Foreign Trade

Since the reform and opening up 40 years ago,China’s economy has maintained high-speed growth for a long time,during which foreign trade has played an important role.With the economy gradually turning to the stage of medium and high-speed growth,and the formation of a new pattern of domestic and international double cycle,the development mode of foreign trade relying on the expansion of volume is unsustainable,and China’s foreign trade is facing a profound problem of transformation and upgrading.Foreign trade enterprises are the micro main body of foreign trade.The transformation and upgrading of foreign trade depends on the dynamic changes of foreign trade enterprises.The success of the transformation and upgrading of foreign trade lies in whether it can cultivate new competitive advantages of foreign trade enterprises,so that foreign trade enterprises can maintain competitiveness and remain invincible in the international competition.The production and operation activities of enterprises rely on various factor inputs obtained from the factor market,and a sound factor market is the guarantee of corporate efficiency.Compared with the commodity market,the market-oriented reform of China’s factor market is relatively lagging,and the degree of distortion is also higher.The distortion of the factor market has become the bottleneck of China’s economic development,and a new round of reform is urgently needed.In April 2020,the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Building a More Complete Factor Market Allocation System and Mechanism",which proposes to "deepen the reform of the market allocation of factors,promote the independent and orderly flow of factors,and improve the efficiency of factor allocation."When there is no distortion in the factor market,the cost of using various factors in the production process of the enterprise is equal to the market fair value of the factors.When the factor market is distorted,different companies no longer use the same cost of factors,and deviate from the market fair value of the factors.This deviation also causes changes in the production costs of foreign trade companies,and foreign trade companies have to take countermeasures to deal with the distortions.Factor prices.Factor inputs include capital,labor,land,technology,etc.The sources and degrees of distortions in different factor markets have certain differences,which can produce superimposed effects.Factor market distortions profoundly affect the survival and development of foreign trade enterprises.Based on the above background,the core question raised in this article is,how does the distortion of the factor market affect the transformation and upgrading of Chinese foreign trade enterprises?To answer this question,this article uses enterprise-level data,first draws on classic literature,and describes and describes the transformation and upgrading process of China’s foreign trade from three perspectives:enterprise trade methods,export product quality,and export domestic value added,and build a factor market The analysis framework of distortion and foreign trade transformation and upgrading.After considering the availability of data related to factor market distortions,taking the price distortions of capital and labor factors as an example,using two-stage least squares and Heckman two-stage measurement methods to test the impact of factor market distortions at the enterprise level The empirical effects of the transformation and upgrading of foreign trade.The main conclusions are as follows:First,on the whole,factor market distortion is an important factor affecting the transformation and upgrading of China’s foreign trade.The distortion of China’s factor market shows a further upward trend after China’s accession to the WTO.While encouraging the rapid growth of export scale,it also affects the process of China’s foreign trade transformation and upgrading,including the mode of trade,the quality of export products and the added value of export.Secondly,different factor price distortions have different effects on foreign trade enterprises’ trade mode,export product quality and domestic added value.As for the mode of foreign trade,capital factor distortion restrains the transformation from processing trade to general trade,while labor factor distortion has the opposite effect.For the quality of export products,capital factor distortion has no obvious effect,but labor factor distortion significantly promotes the quality of export products.For the domestic value-added and value-added rate of enterprise export,capital factor distortion and labor factor distortion both show a significant role in promoting,indicating that factor price distortion has a certain difference in the three aspects of foreign trade transformation and upgrading.Thirdly,from the perspective of mechanism,the price distortions of capital and labor factors have significant differences in the impact mechanism of foreign trade enterprise transformation.In the transformation of trade mode,capital distortion can affect the enterprise’s foreign trade mode by affecting the enterprise’s asset liquidity and enterprise scale,but labor will further affect the enterprise’s R＆D activities.For the quality of export products,capital distortions mainly affect the quality of intermediate products,but labor distortions affect the quality of human resources,intermediate products and R＆D activities.In terms of export domestic added value,both of them increase the enterprise cost plus rate,but the only factor that affects the enterprise R＆D innovation is labor factor distortion.It can be seen that the distortion of capital and labor factor market can promote the growth of Chinese enterprises,including exports,in a short period of time,but in the long run,the distortion of capital and labor reduces the development potential of China’s foreign trade,which has a negative impact on the transformation and upgrading of China’s foreign trade.Finally,based on the above research content and results,this paper puts forward the following suggestions in improving the factor market and promoting the transformation of foreign trade.It mainly includes:improving the property right system and building a high standard factor market system;Reforming registered residence system and promoting the free flow of labor force between urban and rural areas;Reform the system of higher education and optimize the structure of labor force;Deepen the reform of state-owned enterprises and reduce the discrimination of ownership;We should promote the innovation and development of foreign trade and cultivate new competitive advantages in foreign trade.