Study On The Impact Of FDI In Productive Services On The Export Sophistication Of China's Manufacturing

China is a large manufacturing and exporting country.Manufacturing exports have always dominated China's exports.But the value added ratio of our manufacturing is low and the core technology still depends much on foreign countries.Low technology and low value-added products have reduced China's trade profits and even result in the risk of“low-end lock”.In order to mitigate the risks,the Chinese government proposed that we should update manufacturing system to build a country with “manufacturing power ”and“trade power”.Under these circumstances,the sophistication of manufacturing exports,an index reflecting the quality and structure of exports,has received widespread attention.Meanwhile,the productive services has gradually integrated with manufacturing industries as the division of labor grows deeper.Manufacturing exports need the support of productive services such as finance,information technology and transportation.Improving the export sophistication of manufacturing also requires the advanced factors such as technology,knowledge and human capital provided by the productive services industries.China's productive services industries develop slowly,which leads to the short supply of productive services.The introduction of Foreign Direct Investment(FDI)in this area is an important way to optimize the supply of productive services and can promote the development of productive services industries.It is also an indispensable way to improve the sophistication of manufacturing exports and then reshape the competitive advantage of manufacturing trade.This paper uses the panel data of 27 sub-sectors of Chinese manufacturing industry from2011-2017 to test the relationship between FDI in productive services industries and manufacturing export sophistication.First,it analyzes the mechanism that FDI in productive services industries acts on the manufacturing export sophistication,sorts out the relevant literature on manufacturing export sophistication and classifies the determinants of manufacturing export sophistication.Then,it states the current status of FDI in productive services,manufacturing exports and manufacturing export sophistication in China.Based onthese analysis,this paper then empirically tests the impact of FDI in productive services industries on manufacturing export sophistication,using the export sophistication of 27sub-sectors of Chinese manufacturing industry from 2011-2017 as the explanatory variable and the FDI in productive services as dependent variable.The result shows that FDI in productive services industries can improve,to a different degree,the export sophistication of the manufacturing industry as a whole and sub-sectors with different factor intensity.And FDI in different productive services industries has different impact on the manufacturing export sophistication.Finally,based on the results of theoretical and empirical analysis,this paper provides a few suggestions.Firstly,different kinds of productive services industries should take different measures to attract FDI.Secondly,business environment should be improved.Thirdly,technology-intensive manufacturing should be encouraged to innovate business models.Fourthly,low-end manufacturing should pay attention to the use of FDI in productive services industries.