China’s Transport Service Trade Deficit:Forming Reasons And Solutions

One of the important directions of developing China’s transport industry is to expand its international trade market.Transport trade has been growing steadily and an important part of China’s trade of services,but its trade balance has long been disproportionately unfavorable.Therefore,this paper analyses the mode of forming of China’s transport service trade deficit and offers solutions thereto.Observation on the status quo of China’s trade of the industry shows a faster growth in import than export,disparity between the market share of China in global trade and nations with more competitive transport industry,and distinct weakness in sea transport.This paper then uses the transport market theory and trade theories about comparative advantage,scale economy,heterogeneity and endogenous boundary of firms,competition advantage and other aspects,to reference of empirical analysis from two angles: firstly,this paper makes a structural division of the vector difference of import of three sub-industries of transport of 47 industries over 2005-2014 with China’s National Input-Output Table(NIOT),and the vector difference is divided into five parts that can be categorized into three economic effects: Economy Size effect,Industrial Input-Output Relationships Adjustment effect,and Import Dependence effect.The statistics show that about two thirds of transport service import growth of the sampled industries over 2005-2014 can be explained by Economy Size effect and one third by Import Dependence effect,while the Industrial Input-Output Relationships Adjustment effect is negligible.Narrowing down to three sub-industries of transport,the 47 industries have the biggest import dependence problem with water transport,while with inland transport and transport via pipelines they show a tendency to reduce import dependence.With air transport as final demand they have a lighter Import Dependence effect,but a larger one with air transport as intermediate input.Besides,the Import Dependence effect of service factor especially advanced service industries is worth concern.Secondly,this paper does a factor regression analysis of China’s Trade Competitiveness Index with a reference mainly to the Diamond Model of Porter,and does cause-effect tests.The regression results show that the deficit can be translated into a lack in industrial competitiveness in the global market.Insufficient industrialization and production factor(labor and capital)foundation,disorderly dispersed market structure which lacks scale economy,weak trade competitiveness of relevant and supportive industries,and temporary disadvantage of an open market environment jointly result in failure for China’s transport industry to benefit from the great domestic demand and market openness(statistically an open trade market is beneficial to the fostering of the international competitiveness of China’s transport industry).To conclude,the mode of forming of China’s deficit in transport trade is as follows: the main adverse factors are a combination of factor defectiveness of the supply side and weak consciousness of the demand side to cooperate with domestic transport firms at the micro level,disorderly dispersed market structure which lacks scale economy and insufficient support from relevant and supportive industries at the intermediate level,and a highly open trade market temporarily hard to adapt to at the macro level.Not only do they incur transport import directly,but they also result in a structural higher dependence on import.The expansion of export market is also hindered by these factors.The situation is especially severe with the sea transport industry.Therefore,this paper suggests solutions at three levels: guiding firms to approve production factor abundance,develop in a high-quality way,and transform to enterprises rich in intelligence and technology at the industrial level,with especial support to sea transport;guiding relevant industries to give support at the industrial chain level;adhering to service trade open-up and encouraging an outward-looking transport economy at the macroeconomic level.