电子商务论文代写-EC 582代写-Research paper代写
电子商务论文代写

电子商务论文代写-EC 582代写-Research paper代写

EC 582

Research paper 05/10/2021

Analysis of Influencing Factors of China’s Export Trade After The Reform And Opening up

电子商务论文代写 It may be that our sample size is too small which caused this result, or our hypothesis is wrong, that is, FDI in China does not help exports.

1. Introduction

International trade is one of the oldest forms of globalization. As early as 200 BC, ancient China opened up a trade route extending westward, passing through West Asia and the Persian Empire, and finally reaching the Roman Empire. We named it the Silk Road. Through the Silk Road, the Chinese continuously exported porcelain and tea to Western countries and imported various fruits and spices from them. Since that moment, business people all over the world have realized the importance of international trade, especially the export trade that has brought them huge benefits. Export trade is also an extension of domestic trade. We can sell domestic services or goods to countries that need them. Through export trade, while obtaining huge profits, we can find a larger market, reduce production costs on a large scale, and maximize the utilization of domestic resources and labor.

After the “Reform and Opening up” policy in 1978, China has a pivotal position in the field of international trade whether as the world’s largest exporter or the world’s second largest importer in recent years.

Made in China has become synonymous with China’s export trade. We can see products with the Made in China logo in many places. As the world’s largest manufacturing country, China has a complete industrial system, and the output of hundreds of industrial products ranks first in the world. Complete industrial categories and a strong manufacturing base provide strong support for the development of export trade.  电子商务论文代写

According to theChina Statistical Yearbook, since 1995, China’s total exports have far exceeded the total imports, and the growth rate of exports is much higher than that of imports. The growing trade surplus makes our export situation good and clear. Therefore, in the case of China’s exports have a huge impact on the world, I think “analyzing some economic factors affecting China’s export trade” will be an important and meaningful topic. Through this study, we can explore the relationship between China’s economic factors and export trade, and then find ways to make China’s export trade continue to grow.

In the following pages, I will conduct a literature review and then introduce China’s trade and economic background. Then discuss the practicality of the data and establish an econometric model based on China’s export trade and some influencing factors. Finally, I will get the estimated result and make a summary and suggestion.

2. Literature review

Based on previous experiments and analysis, we can find that there are many economic factors that affect the export trade of China and the world. Research by Sun and Heshmati (2010) supports that China’s rapid economic growth has made the world a Chinese market. They reviewed the changes in China’s trade policy and used qualitative and quantitative findings to find that more and more participation in global trade and economic growth have formed a positive relationship. China’s coastal provinces have strong economies. A large amount of foreign direct investment and labor are the main reasons that help the rapid economic growth of China’s coastal provinces.

The foreign direct investment in coastal provinces is mainly engaged in processing trade. They import raw materials from other places, process and assemble them, and then export the final product to the world market (Bao et al., 2002). In addition, through the gravity model, which is a model widely used for estimating trade flows between countries,China’s export trade has completed the transition from labor-intensive to capital-intensive and service-intensive. This major change in China’s trade structure has a huge correlation with the rapid growth of export trade (Caporale et al., 2015). Freitas (2019) states that the “Reform and Opening up” policy has opened the door to the world for China. This policy has successfully changed the ownership structure in rural and urban life in China, and the new economic model has changed the fate of generations in China and the world.

3. China’s economic and trade background  电子商务论文代写

In the two millennia before the first industrial revolution, China was far ahead of the world in terms of economy and technology. Probably because of being the leader in the world for a long time, the rulers of China have thoughts of arrogance and pride. As a result, while Western countries entered the machine age due to the industrial revolution, China in the eighteenth century implemented a closed-door policy, that is, strictly restricting the exchanges of trade, cultural, and scientific with foreign countries. In this way, China was surpassed by other countries in a short period of time and became a semi-colonial country more than 100 years ago.

After the founding of the People’s Republic of China in 1949, due to the Second World War and the Korean War, China was still in a period of economic recovery and strictly restricted foreign trade.

At that time, China was like an island, completely isolated from the world. The data from the World Bank shows that China’s per capita income in 1978 was US$132.97, which is far below the absolute poverty line of the United Nations. Poverty puzzles China severely, even the food needed for survival is rationed and does not allow free trade.

Under the background that the most basic survival of the Chinese has become a problem, China has begun to implement the policy that is sufficient to change the destiny of the Chinese people and the direction of the world, namely the “Reform and Opening up” policy. The most important result of this reform is the birth of individual economy and private economy. More and more people choose to give up working in state-owned units with relatively secure income and start their own businesses. Until today, the vitality of private enterprises has far exceeded that of state-owned enterprises. They have brought endless wealth and explosive economic growth to China.

In order to better study the relationship between China’s export trade and some economic factors, we need to understand China’s economic conditions in the past 40 years.

Figure 1 is an introduction to the overall economic situation and the income situation in China. Since the implementation of the “Reform and Opening up” policy in 1978, China’s GDP has risen sharply, from 149.54 billion U.S. dollars in 1978 to 14,279.9 billion U.S. dollars in 2019. Within 40 years, China’s GDP has risen 95 times, with an average annual growth rate of 12.07%. GDP per capita rose from US$156.4 to US$1,0216.6. Calculated in terms of GDP, the value created by the Chinese people in a day’s work has risen from less than one U.S. dollar in 1978 to nearly 30 U.S. dollars in 2019.

China’s per capita income is also growing rapidly, from US$133 to US$8393.7. It took China 40 years to successfully move from a low-income country to an upper-middle- income country. In the 20 years before 2001, the growth of GDP and income in China has been relatively slow, but since China’s accession to the WTO in 2001, China’s economy and income have begun to grow more and more rapidly.  电子商务论文代写

This speed will continue to expand and continue to have an impact on the world. Figure 2 shows China’s trade situation in the past 40 years. What can be seen is that China’s trade, whether it is exports or imports, began to usher in explosive growth in 2001. In addition to the 2008 financial crisis and the decline caused by the global economic downturn in 2015, China’s trade volume has always been in a stage of rapid growth.

China also achieved a trade surplus in the late 1990s, and it is gradually expanding. Thanks to China’s outstanding export trade performance, China’s foreign exchange reserves are growing in the same trend.

These foreign exchange reserves have become China’s precious wealth and continue to drive the continuous growth of China’s trade. Figure 3 is about China’s investment and tariffs since the “Reform and Opening up”. The actual use of foreign capital refers to the amount of foreign capital that actually arrives after China has signed a contract with a foreigncompany.

It can truly reflect China’s level of foreign capital utilization. Marked by China’s entry into the World Trade Organization, China’s actual use of foreign capital has achieved rapid growth. Foreign direct investment is a kind of actual use of foreign capital, and it is one of the most important forms of modern capital internationalization. The proportion of China’s FDI in the actual use of foreign capital is constantly increasing. Even since 2015, China’s actual use of foreign capital is entirely composed of FDI. Fixed asset investment refers to the economic activity of constructing and purchasing fixed assets.  电子商务论文代写

As the Chinese people gradually become wealthy in the 21st century, we have also begun to make various investments while solving food and clothing. China’s fixed asset investment rose from 47.58 billion U.S. dollars in 1978 to 8130.38 billion U.S. dollars in 2019. An increase of 170.8 times. These investments will help China achieve better economic growth. Tariffs and export trade volume maintained a consistent trend, rising from 1.67 billion U.S. dollars to 41.88 billion U.S. dollars. Its rise also means the rapid development of China’s export trade. Figure 4 shows some ratios. The first is the exchange rate of USD to RMB. Before “Reform and Opening up”, China implemented a planned economy. All foreign exchange income earned through export trade must be sold to the country. The foreign exchange people need is also allocated and granted according to the country’s plan.

Therefore, China’s exchange rate system is pegged to a single currency, the US dollar, and the exchange rate policy objective is long-term stability of the RMB exchange rate.

The exchange rate of USD to RMB was basically 1 before 1978. After 1978, China’s exchange rate policy was changed to support exports and increase foreign exchange income. What this showed was that the exchange rate of US dollars to RMB continued to increase, because only RMB depreciation could promote exports. In 1994, the exchange rate reached its peak, at 8.61 RMB for one U.S. dollar.

After that, the exchange rate of the U.S. dollar began to fall and has remained between 6 and 7 in recent years. The proportion of China’s tertiary industry has steadily increased in the past 40 years, that is, the output value of China’s service industry accounts for an increasing proportion of the national GDP output value. The consumer price index fluctuates, but in recent years, it has gradually stabilized. As a macroeconomic indicator that reflects changes in the price level of purchased consumer goods and services, changes in CPI have a key impact on the national economy and export trade.

电子商务论文代写
电子商务论文代写

4. Econometric model  电子商务论文代写

After the background introduction, we can start to discuss the empirical model for this paper. Rather than arbitrarily setting, China’s export trade volume is an output by some factors, such as economic development, investment, and exchange rate. Thus, we can establish an export- influencing model, and the dependent variable is the amount of China’s export. Since there are many factors that can affect the export, based on the data I found, the explanatory variables include GDP per capita, income per capita, fixed assets investment, foreign exchange reserves,U.S. dollar to RMB exchange rate, actual use of foreign capital, FDI, tariff, proportion of tertiary industry and CPI.

In Caporale’s (2015) paper, they wrote that China is heavily dependent on export-led growth, so that the downturn in the world economy has a negative impact on China’s exports. Therefore, in addition to these numerical variables, I create a binary dummy variable for this model, and I called it financial crisis. Due to the economic weakness in 2008 and 2015, I separated these two years from other years. The value of the financial crisis in these two years is 1, and the value of the other years is 0. In this way, we can judge the impact of economic weakness on China’s export trade. We can also use a F-test method to test whether this dummy variable is needed or not. Thus, the main model of this research should have the following causality equation,

?????? = ??????(??? ??? ??????,?????? ??? ??????,????? ?????? ??????????,??????? ???????? ????????,

?. ?. ?????? ?? ??? ???????? ????,?????? ??? ?? ??????? ???????,???, ??????,

?????????? ?? ???????? ????????,???, ????????? ??????)

Linear regression is the most commonly used method for numerical data modeling, and it can help us to set up the empirical model.

When we need to use regression equations to study the linear relationship between a dependent variable and multiple independent variables, we need to use multiple regression analysis with OLS. In basic regression model, the coefficient of an explanatory variable represents the change in the number of dependent variables from each unit increase in the explanatory variable. However, in this study, we ‘d like to study the percentage changes in the number of dependent variables with every one percent increase in the explanatory variable. Therefore, we will use the “log-log” model. Based on what discussed on the previous section, the mathematical representation of the models will be  电子商务论文代写

???(??????) = ?? + ?? ∗ ???(????????????) + ?? ∗ ???(???????????????) + ?? ∗ ???(?????????????????????) +

?? ∗ ???(???????????????????????) + ?? ∗ ???(?. ?. ???????????????????????) +

?? ∗ ???(?????????????????????????) + ?? ∗ ???(???) + ? ∗ ???(??????) +

?? ∗ ???(????????????????????????????) + ??? ∗ ???(???) + ??? ∗ ??????????????? + ??

The first concern of this model is the omitted variable bias. For example, in the trade war between China and the United States, the United States is China’s main exporter, and the increase in U.S. import tariffs will definitely lead to a reduction in China’s export trade. But since this bias has no effect on our explanatory variables, we can ignore the error caused by this bias.

The second issue that this model needs to worry about is correlation. I calculate the correlation between the two variables for all variables in the entire data set, and the result is the following table.

We found that the correlation coefficients between many variables are very high (greater than 0.7), which may be due to the similarity of the trends and growth rates of these data, because my data is from 1978 to 2019, basically the values of all variables are rising, and the growth rates of many variables are similar.

However, multiple linear regression requires that the independent variables are independent of each other, and perfect multicollinearity cannot occur, that is, there cannot be a highly correlated relationship between all independent variables.

There are two main ways to solve multicollinearity: increase sample size and delete variables. Since I have found all the data that can be used, we choose to keep the more important variables and delete the less important variables. Stepwise regression is a good choice. It is a method of bidirectionally filtering variables based on the combination of forward selection and backward elimination.  电子商务论文代写

We need to introduce independent variables one by one, and after each independent variable is introduced, the selected variables are tested one by one.

If the original introduced variable is no longer significant due to the introduction of subsequent variables, then remove it. This process is repeated until no insignificant independent variables are introduced into the regression equation, and no significant independent variables are removed from the regression equation, then we can obtain an optimal regression equation. After the stepwise regression test, the actual use of foreign capita and tariff are deleted from the model, and the final model is

???(??????) = ?? + ?? ∗ ???(????????????) + ?? ∗ ???(???????????????) + ?? ∗ ???(?????????????????????) +

?? ∗ ???(???????????????????????) + ?? ∗ ???(?. ?. ???????????????????????) + ?? ∗ ???(???) +

?? ∗ ???(????????????????????????????) + ?? ∗ ???(???) + ?? ∗ ??????????????? + ??

5. Data

Variable Mean Std.Dev Min Max
Export (100 million) 7327.95 8931.65 97.5 24994.8
GDP per capita 2495.55 3149.08 156.4 10216.6
Income per capita 1915.62 2388.39 133 8393.7
Fixed assets investment (100 million) 21938.57 32638.48 475.8 97572.3
Foreign exchange reserves (100 million)  

10212.08

 

13822.89

 

1.67

 

38430.2

Exchange rate USdollar to RMB 5.85 2.38 1.49 8.6
Actual use of foreign capital (100 million)  

565.92

 

462.38

 

21.7

 

1381.4

FDI (100 million) 517.63 477.92 3.5 1381.4
Tariff (100 million) 152.27 157.45 16.7 462.9
Proportion of tertiary industry 37.58 9.2 22.3 53.9
CPI 4.69 5.44 -1.4 24.1

 The above table shows the statistics of the variables in this study.

In addition to the per capita income data comes from the World Bank, all the rest of data comes from the “2020 China Statistical Yearbook”, which is compiled by National Bureau of Statistics of China and published by China Statistics Press. This is a statistical book published once a year in a row. The whole book is divided into many chapters, such as population, national economy, jobs, price, resource, investment, etc., and each chapter contains many excel files distinguished by year or type.

These data files describe the situation in China in detail from all aspects. Since the data I need are scattered in many data files, and they are all in Chinese, then I manually integrated all the required data into a new data file and translated it into English. These data include the corresponding values for all variables from 1978 to 2019. One regret is that I originally wanted to count the exports according to different countries, so that I can have the panel data for more accurate analysis, but basically the export data that are accurate to the country start from 2000, and there is no data for the last century, so export in my model represents China’s total exports to the world.

6. Hypothesis  电子商务论文代写

We can make some null hypothesis and alternative hypothesis for our model, and then use T-test to verify the analysis result through the data. Since China’s export trade volume increases with the continuous expansion of the economy, we can assume α1 > 0. Regarding the impact of income on export trade, we have not found relevant analysis from the previous literature, and there is no relevant theory for our reference, so we can suppose that per capita income has no impact on export, that is, α2 = 0.

Increased investment in fixed assets can help Chinese domestic companies to produce, so they can produce more things to sell overseas, and we get α3 > 0.There is naturally a positive relationship between foreign exchange reserves and export trade because all of China’s foreign exchange reserves come from exports. Through exports, China has completed the original accumulation of foreign exchange reserves. Thus, we can have α4 > 0.

According to the laws of currency and export, when RMB depreciates, other currenciesappreciate relatively, so they will increase their imports from China, which is to promote China’s exports.

Therefore, when the exchange rate of USD to RMB rises, RMB will depreciate relatively, and Americans will buy things from China relatively cheaply, so China can increase exports, that is, α5 > 0. FDI is the direct investment of foreign businessmen in China. Most of these investments are used to promote production, and the products produced will be exported.

Therefore, the increase in FDI should lead to the increase in exports, and α6 > 0. Previous studies have shown that China’s export trade has completed the transition to service-intensive.

Therefore, the increase in the proportion of the tertiary industry will undoubtedly expand China’s production, so we have α7 > 0. Next one is CPI. My hypothesis is that if prices rise, Chinese consumption will decrease, and the remaining goods and products can only be used for export, so α8 > 0. The last one is the financial crisis. There is no doubt that the downturn in the world economy will definitely lead to a decrease in global trade, and China is no exception, so China’s exports will decrease. Thus, we can have α9 < 0. All alternative hypothesis are the opposite of null hypothesis.

7. Estimation Results

I imported the data in R and performed the analysis. Below is my estimated result.

Note: *p**p***p<0.01

From the above results, we can see that after the use of stepwise regression, when the significant level is α = 0.05, except for FDI, CPI and financial crisis, other variables are statistically significant. Among them, the p-value of FDI is 0.07065, and the p-value of CPI is 0.05604, which means that they are quite close to statistically significant. However, the p-value of the financial crisis is as high as 0.59736, so we can verify whether this dummy variable should be added to the model through F- test.

The null hypothesis is H0: α9 = 0, and the alternative hypothesis is : α9 ≠ 0. In this test, the significant level is 0.05, the degree of freedom of denominator is N-K = 38 – 10 = 28,and the degree of freedom of numerator is 1. Then we can get the critical value, which is equal to 4.2. The statistic value of this test is Since Fs < Fc, then we fail to reject the null hypothesis, and the conclusion is this dummy variable should not be added in this model. Therefore, we will apply the first regression result.

Now we can use t-test to verify whether the results we get are consistent with our hypothesis.

In the case of significant level is 5%, and degree of freedom is 29, the t-critical value is ±1.699 for one-tailed test, and ±2.045 for two-tailed test. The t-statistic value of GDP per capita is 3.413, which is greater than -1.699, then we fail to reject our null hypothesis α1 > 0. It shows that an increase in GDP per capita will promote China’s export trade. The coefficient is 3.047, This means that for every 1% increase in GDP per capita, China’s total exports will rise by 3.047%. For the income per capita, the t-statistic value is -3.581, which is less than -2.045, then we have strong evidence to reject the hypothesis α2 = 0.  电子商务论文代写

The correct relationship between income per capita and Chinese exports is negative, since the coefficient is -3.069, which means for every 1% increase in income per capita, the exports of China will decrease by -3.069%. From the perspective of fixed assets investment, the t-statistic value is 2.239. It is greater than -1.699, and we fail to reject the hypothesis α3 > 0. We got a coefficient 0.427 for fixed assets investment, and this result shows that for every 1% rise in fixed assets investment in China, the exports will increase by 0.427%. The t-statistic value of foreign exchange reserves is 5.684.

Since it’s larger than -1.699 as well, then we can accept the hypothesis α4 > 0.

The sign of the coefficient 0.22 is expected, which indicates China’s exports will increase by 0.22% when there is a 1% increase in foreign exchange reserves. For exchange rate USD to RMB, the t-statistic is 2.580, which means we fail to reject the hypothesis α5 > 0. The coefficient 0.694 also proves that the hypothetical relationship is correct. The t-statistic value of FDI is -1.877, which is unexpected. Since it’s less than -1.699, then we have strong evidence to reject the hypothesis α6 > 0.

The coefficient is -0.173, which means the correct relationship between FDI and exports is negative. Because the p-value of FDI is 0.07065, it is not statistically significant at a level of 0.05. It may be that our sample size is too small which caused this result, or our hypothesis is wrong, that is, FDI in China does not help exports. For the last two ratio variables, their t-statistic is 2.719 and 1.990, which is higher than -1.699, then we fail to reject the hypothesis α7 > 0 and α8 > 0. Their coefficients also show that our hypothetical relationship is correct. Both the increase in the proportion of the tertiary industry and the increase in CPI have a positive impact on China’s trade exports.

8. Conclusion

In this study, we used the OLS method to analyze the factors affecting China’s export trade. Most of these factors have a positive impact on China’s export trade. Since China implemented the “Reform and Opening up” policy in 1978, China has made great achievements in many fields such as economy, trade, and foreign cooperation. The increase in the size of the

Chinese economy, investment and consumption have greatly promoted the development of export trade. Even though the financial crisis had an impact on China’s export trade, China quickly recovered. China’s export trade has maintained a steady growth every year, it does not mean that there is no potential danger, because there are too many factors affecting export trade, and there may be a complementary relationship between these factors.  电子商务论文代写

Therefore, if China wants to maintain the current export situation, the policy orientation of export trade and the structural adjustment of China’s economy will have a significant impact.

The Chinese government should implement policies that continue to encourage the increase in domestic and foreign investment and stimulate more consumption by the people. This is an important engine driving the growth of the economy and export trade. At the same time, some policies should also be reassessed, such as monetary policy. Although the devaluation of the RMB is beneficial to China’s export trade, under the current international situation, China can no longer raise the exchange rate without any scruples as it did 40 years ago. Economic institution is another issue that China cannot ignore.

Although the proportion of the tertiary industry is increasing in China, China is still a large manufacturing and agricultural country. China needs to complete the transition to capital- intensive and service-intensive as soon as possible, which can accelerate China’s export trade and economic development faster. These national-level policies will be the factors that will dominate China’s export trade in the future.

Reference  电子商务论文代写

  1. 2020 China Statistical China Statistics Press,http://www.stats.gov.cn/tjsj/ndsj/2020/indexch.htm
  2. WorldBank,

https://data.worldbank.org.cn/indicator/NY.GNP.PCAP.CD

  1. Sun P, & Heshmati, A. “International trade and its effects on economic growth in China”,https://econstor.eu/bitstream/10419/46020/1/657065684.pdf
  2. Bao, S., Chang, G. H., Sachs, J. D., & Woo, W. T. (2002, April 12). Geographic factors and China’s regional development under market reforms, 1978–1998. China Economic Review.https://sciencedirect.com/science/article/pii/S1043951X0200055X.
  3. Caporale, G. M., Sova, A., & Sova, R. (2015, April 2). Trade flows and tradespecialisation: The case of China. China Economic Review. https://sciencedirect.com/science/article/pii/S1043951X15000516#s0040.
  4. Freitas, M. V. D. (2019). Reform and Opening-up: Chinese Lessons to the World. Policy Center for the NewSouth.

https://www.policycenter.ma/sites/default/files/PCNS-PP-19-05.pdf

 

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