Financial Development,Trade Mode Transformation And Global Value Chain Upgrading

Since the 1990s,especially in the 21st century,the division of the global value chain rises.China gradually integrated and embedded into the global division of the value chain through the processing trade with the help of labor advantage.But now China is faced with serious mismatch of trade scale and trade profitability,which means that China's trade surplus is high,but is locked in the low end of global value chain due to the prosperity of processing trade.Especially in recent years,with the continued downturn in foreign demand and China's "demographic dividend" gradually disappear,how to upgrade trade and enhance our position in the global value chain to maintain our competitive advantage in global trade has become a major and urgent issue recently.This paper explores how to realize the transformation of China's trade mode and the upgrading of global value chain from the perspective of finance.This paper first studies the impact of financial development on the transformation of trade mode by using the provincial panel data from 1997 to 2009.The measurement results show that with the increase of the degree of marketization of the financial industry and the credit funds are tilted to the non-state enterprises,the export share of processing trade is significant declined,and the restraining effect is the same as the assembly processing trade which is of the lowest added value.This conclusion is still very robust after removing the outliers,taking into account the effects of the financial crisis and dealing with endogenous problems with tool variables.It shows that financial development has effectively hindered the development of processing trade,promoted the transformation of trade mode to ordinary trade,and because of the different value forms of global value chain implied by different trade methods.Therefore,financial development will finally promote the Global Value Chain upgrading through trade mode transformation..To further study the impact of financial development on global value chain upgrades from a micro-level,this paper adopts the matching data of China's industrial enterprise database and China Customs import and export trade database from 2005 to 2009,taking the domestic value-added rate of export enterprises as the angle of view.The measurement results show that:(1)The domestic value-added rate of processing trade enterprises is significantly lower than that of ordinary trade enterprises,and the gap is very stable,which means that the extensive development of processing trade has pulled down our country's global value chain.(2)The ease of corporate financing constraints will significantly improve its domestic value-added rate,this conclusion is still robust while excluding outliers,taking into account of the financial crisis,and distinguishing between ownership,indicating that corporate financing capacity is conducive to raise the corporate's global value chain.(3)The mechanism of financial development to promote the global value chain upgrade is to promote the trade mode transformation,which is especially obvious to non-state enterprises.The empirical evidence at the provincial level and the enterprise level shows that the improvement of financial development,and the ease of corporate financing constraints will promote the transformation of trade mode and finally led to the global value chain upgrading.This paper provides a viable path to solve the dilemma of global value chain locked in the low end.