Intra-Industry Trade And Evolution Of China's Industrial Structure: Theoretical And Empirical Study

Intra-industry trade phenomenon receives high attention in new theories of international trade, especially its profound impact on international division and industrial development. Exposed to the tide of globalization, intra-industry trade claims the main role in international trade, and also the future trend of China' s foreign trade. This paper tries to study the influence of intra-industry trade on China' s industrial structure change after her opening up theoretically and empirically. First, a review of intra-industry trade theories is conducted in order to work out the general rule of industrial structure change in different countries. It is found that: (1) intra-industry trade has both positive and negative effects on industrial structure change; (2) Different division modes turn out to have different impacts on national economics. Based on the above analyses, this paper finds that China' s industrial structure change complies with the general rule. Besides, the empirical study tells that intra-industry trade is an important factor that contributes to the evolution of China' s industrial structure change. However, intra-industry trade of China is characterized with the vertical intra-industry trade, among which the processing trade takes up the main part. Therefore, the fact cannot be denied that in long term, vertical intra-industry trade has little contribution to the adjustment and upgrade of our industrial structure, though vertical intra-industry trade conduces to the improvement of China' s foreign trade competitiveness in short term. Take all these factors into consideration, this paper puts forward some suggestions on how to optimize the positive effects of intra-industry trade on China' s industrial structure change.