The Analysis On Vertical Specialiaztion Impacting On Processing Trade Of China

With the development of economic globalization, the traditional form and the nature of international trade are undergoing a profound change in recent decades. One of the most striking change is the emergence of the global production network, that is to disperse to different countries or regions to specialized in a certain process or intermediate components, instead of focusing the production on a particular country or region, thereby enabling the international division of labor deepen to the internal industry rather than the external industry as it was, this form of division is vertical specialization, of which the trade form is internal trade of production, the processing trade is the main form of the product internal trade especially in China at this stage that participating in international vertical specialization of trade reflected directly in the form of processing trade.International vertical specialization is an old trade term, the conception of which is blurry yet. Therefore, the author gives international vertical specialization a conception at first before the research of analysis of the paper. During of the theory and demonstration, international vertical specialization includes vertical integration and vertical non-integration. Namely, what the paper researches the effect of international vertical specialization impacting on processing trade changes to the research vertical integration and vertical non-integration impacting on processing trade. In this paper, vertical integration includes three parts which all promote processing trade. Along with the increase of international vertical specialization, The research of vertical non-integration promote trade processing through the subdivision of working procedure and scale economy. After the argument of theory, mathematical model testifies the theory which is right. At last, the paper calculates correlative modulus using the data of China.This paper is a study of how vertical specialization can affect the processing trade. In the theoretical part, the author will derivate the positive relations of the vertical specialization to the processing trade by mathematical model. In the empirical part, the author will give China's recent data to prove the vertical specialization that it has a long-term positive promotion to the processing trade, and finally concluded that the vertical specialization's preoccupancy to the processing trade and the deepening of vertical specialization led to the rapid development of processing trade, while there is no obvious promotion of relations of the processing trade to the vertical specialization, which further validated the traditional theory that the international division of labor in international trade makes the international trade occur. At last, the correlative suggestions of policy are advanced follow the conclusion.