Research On China 's Processing Trade Transfer

Processing trade is a breakthrough point in participating in international division of work and developing export-oriented economy. It plays a significant role in attracting foreign investment, introducing advanced technology and management methods, promoting the development of regional economic prosperity. However, as the costs in labor, land and others have risen sharply and demographic dividend has disappeared gradually, the compared advantages of China’s processing trade is receding. In recent years, China’s processing trade industry transferring continually, and the proportion on total trade is reducing constantly.Under such background, what is the direction of China’s processing trade in future? And is it necessary for China to develop processing trade continually in future?So, this thesis, based on the theory of comparative advantage, studies related theories and previous research results and on the bases of objective data, analyzes the current status and characteristics of China’s processing trade, as well as the comparative advantage of China’s processing trade and its waning reasons in the aspects of labor cost, labor productivity, policies, etc. By using theory model and panel data empirical model, this thesis estimates the degree of different reasons that affect processing trade transferring, and analyzes the transferring paths and reasons of China’s processing trade. According to these conclusions, this thesis puts forward some feasible policy suggestions on China’s processing trade.In the medium term, processing trade still has positive effects on providing jobs, making full use of labor resources and balancing the development in different regions. As a result, it is necessary to develop processing trade. But in the long term, it’s an inevitable trend of processing trade transferring from east region of China. The west and middle region of China will undertake some labor intensive and resource intensive processing trade with certain technology level. Southeast Asia and South Asia regions will undertake much of compared low technology and labor intensive processing trade, in the same time, some high-end manufacturing will backflow into developed countries, but the future development cannot be certain.