The Impact Of China’s Industrial Structure Adjustment On The Price Terms Of Trade

The price term of trade is a basic measure of a country’s position in the international division of labor, and its international trade benefit quota. Since the "Worsening Terms of Trade Theory" was put forward, the terms of trade of developing countries has become one of the research focuses. Many empirical studies on China’s price terms of trade agree that the price terms of trade has being deteriorating, at the same time, the income terms of trade has been improved continuously. It can’t fully reflect the interests of international trade of China only from the perspective of the price terms of trade, but from a theoretical point of view, the price terms of trade is the basis of all of other terms of trade index, and it can reflect a country’s trade benefits in the long-term. Meanwhile China’s price terms of trade has been deteriorating for a long time, insensitive study of the prices terms of trade of our country will find problems and put forward the practical ideas. Therefore, this study focuses on the price terms of trade only.In addition to economic growth, FDI, exchange rate and other factors, the influence of industrial structure on the price terms of trade of a country is more and more outstanding.A country’s industrial structure, especially the export industry structure, determines what to product and to export, and then impacts the trade structure.and the price terms of trade. According to "The theory of comparative advantage","The Product Life Cycle Theory" and "The Human Capital Theory", this paper analyzed the impact of industrial structure on the price terms of trade. The conclusion is that the adjustment of industrial structure affect the terms of trade through two ways:First, it change both the types of the Import and Export Commodity and their proportion and composition(the trade structure). Second, the adjustment of industrial structure and the trade structure can change the prices of those commodities indirectly. Finally, through the research of China’s price terms of trade during the period of1981-2011, we found that the total price terms of trade and commodity prices terms of trade were getting worse in general.But after2009, the terms of trade was improved to a certain extent. Especially for the export capital and technology intensive products which had shown an increasing trend since2003. Consistent with this, the adjustment of the industrial structure and trade structure in China has achieved some success. The empirical results show that the agreement is not a coincidence, but the industrial structure adjustment has played a positive role in the improvement of the price terms of trade in long-term.