The Influences Of Rising Labor Costs On The Transformation And Upgrading Of Chinese Processing Trade

Processing trade is Chinese new choice of foreign trade under the background ofeconomic globalization. Since the implementation of processing trade policy, Chineseprocessing trade has achieved rapid development. Processing trade optimizes the structure ofexport products, promotes Chinese foreign trade development, contributes to the developmentof Chinese economy and enhances our international competitiveness. In short, processingtrade plays an important role in the opening up especially the export processing industrywhich has become our important form of participation in the international division of labor.However, there have been many problems that can not be ignored in the process of rapiddevelopment of processing trade, such as processing trade enterprises with lower technicallevel whose products are at the bottom of the global value chain, small profit margins,weakening traditional comparative advantage, etc. In particular, in recent years, thephenomenon of "labor shortage" and rising labor costs emerges constantly, which has broughtenormous challenges for the development of Chinese processing trade.At the beginning of this paper, we will analyze the background and development historyof Chinese processing trade, which points out the importance of our labor advantage toChinese processing trade and the importance of processing trade to our country in theinternational division of labor. Processing trade played an important role in our nationaleconomic growth. Then this paper will point out the trend of Chinese labor costs. Importantly,this part will focus on the factors that cause changes in labor costs. Then, this paper willexplore the influences of rising labor costs on the transformation and upgrading of Chineseprocessing trade from processing enterprises, foreign investment and export processing tradecompetitiveness. Finally, this paper will put forward specific measures to promote thetransformation and upgrading of Chinese processing trade at the background of rising laborcosts from both the processing business and government.