Transcript The World is Flat -- A New Perspective of International Trade

国际贸易
International
Trade
Dr. Miaojie Yu
CCER
Peking University
Slides prepared by Thomas Bishop
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Copyright © 2006 Pearson Addison-Wesley. All rights reserved.
Outline of the Talk
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Integration of Trade
Disintegration of Production
China’s Current Trade Situation
Sino-U.S. Trade Relationship
Traditional Trade Theory
Current Research Topics
Q&A
Integration of Trade
• How much do we trade?
• Trade still remains a seemingly small fraction of GDP for rich
countries.
• The decades leading up to 1913 was a golden age of global
trade and investment.
• The global integration of trade keeps the same level.
• Table 1 ( Feenstra, 1998)
Integration of Trade
The World Is More Integrated Than Ever
• Some facts are hidden.
• Industrial countries have increasing shares of their economies
devoted to services rather than manufacturing.
• Make comparison from different views.
• Should measure merchandise trade relative to merchandise
value-added.
• Almost all countries have experienced substantial growth in
trade.
• Table 2
Table 1.2 Merchandise Trade
Relative to GDP and
Merchandise Value-Added,
1960-1990 (percent)
Table 1.1 U.S. Merchandise Trade by Industry, 2001,
Shares of Total Trade and Production or Use (percentages)
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
4-10
Table 1.3 Percentage Distribution of
Exports by Major Trading Groups,
1985-1998
Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
4-11
How to Explain Growing Trade?
• Trade Liberalization
– GATT/WTO
– Regional Trade Agreements: CUSFTA, NAFTA, CARICOM, CACM,
MERCOSUR, ASEAN, SPARTECA.
• Falling Transportation Cost
• 2/5 trade growth can be explained by these two factors.
• When trading partners becomes more similar in size.
-- Example: World GDP=150;
– Scenario 1: Country A= 100; country B=25, country C=25
– Scenario 2: Country A= 50; country B=50, country C=50
– Maximum exports are different.
Disintegration of Production
• Disintegration of production itself leads to more trade
due, in large part, to the calculation method.
• Outsourcing
• Barbie doll story (Tempest, 1996)
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Sell for about $10 in the U.S.
Made in Mainland China, but export from Hong Kong for $2
65 cents cover materials cost, 35 cents pay for Chinese labor.
The remaining 1$ for transportation in China
The remaining 7$ for transportation, marketing, wholesaling and
retailing.
– $1 for the Mattel.
Outsourcing
• First measurement: trade is categorized by the end-user.
• The U.S. trade shifts away from agriculture and raw materials,
and towards manufactured goods in the U.S. trade.
• Processed manufactured goods play an increasing important
role in U.S. trade.
• Outsourcing is important!
• U.S. firms have been substituting away from these processing
activities at home.
Outsourcing on the value-chain
Another measurement: imported intermediate goods
The World is Flat
• Vertical specification : another name of Outsourcing
• U.S. has a doubling of the share of imported inputs between
1975 and 1995 for all manufacturing.
• The U.K. shows an especially large absolute increase in
foreign outsourcing.
China’s Current Trade Performance
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Trade Growth
Trade Liberalization
Accede to the WTO
Trade Pattern
Increase of the inward FDI
CCER, Dr. Miaojie Yu
GATT/WTO Members
CCER, Dr. Miaojie Yu
Trade Openness
• China became the 143rd member of the GATT/WTO
• China keeps a large trade surplus.
• Trade openness is $2,170 billion, which is more than
63% of current GDP in 2007
• The third largest one in the world
• Current Export is $969 billion and import is $ 792 billion.
• So trade surplus is $177 billion in 2006.
CCER, Dr. Miaojie Yu
Dramatic Increase in
Openness
CCER, Dr. Miaojie Yu
Trade Openness
China’s Current Trade Situation
• Current trade openness is around 64% of GDP.
• China’s share in world trade has grown steadily since
1979.
China’s Trade
• China has increased its penetration into rich countries’
market.
China’s Trade
中国2006年出口值
25000000
20000000
15000000
10000000
5000000
0
美国
中国香港
日本
中国2006年出口值
韩国
德国
25
China's Exporting Destination
percentage
20
15
10
5
0
ASEAN
Taiwan, China
United States
year 2005
Hong Kong,
China
year 2006
Japan
Korea Rep.
China’s Trade
• Simultaneously, it also becomes a more important export
destination.
China’s Trade
中国2005年进口值
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0
日本
韩国
中国台湾
美国
德国
马来西亚
中国2005年进口值
澳大利亚
泰国
菲律宾
新加坡
China’s role in Asian Regional Trade
• China is now among the most important export
destinations for other Asian economies
Strong Export Potential Forward in China
• China’s integration with the world economy so far is not
unprecedented in either its scope or speed.
• Compared to Japan, Korea, and other NIEs in their fast
development period, China’s exports have grown at a
slower rate than theirs.
• This suggests that China could maintain relatively high
strong export growth for years to come.
Composition of Trade
• Diversify from an initial heavy reliance on textile and
other light manufacturing.
• In the early 1990s, exports profiles rank as follows: light
manufacturing, textile, machinery and transport (small
electronics).
• Today, China exports more sophisticated electronics,
furniture, travel goods, and industrial supplies.
Intra-Industry Trade
Sources: database of China
Customs
CCER, Dr. Miaojie Yu
Outsourcing in China
Trade Balance
• China keeps a modest overall trade surplus.
• China has significant trade surplus from trade with the
U.S.
• But it was offset by an increasing trade deficit with the
rest of Asia.
Sino-U.S. Bilateral Trade
• This year China reaches a $144 billion trade surplus with
the U.S.
• Simultaneously, more than 3 million workers lost their
jobs.
• Congressmen in the U.S. threat to perform trade
sanction with China.—Impose 27.4% high tariffs.
• Push RMB revaluate strongly and quickly.
• Pending the permanent most favored nation (MFN)
treatment.
Questions
• Economically speaking, is it deficit necessary bad for the
deficit country, and good for the surplus country?
• Any essential link between the blue-worker
unemployment and trade deficit?
• Is it credible for the U.S. congressional threat?
Trade Deficit is not necessarily bad!
• Check the basic trade identity:
Trade Deficit=Net Inflow of Foreign Capital
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Trade deficit is like borrowing money from foreigners.
The key point is how to use.
Investment or Consumption?
Historical stories in 1980s, 1990s, and 2000s.
Trade Deficit itself is not Bad
• Trade deficit means financing from other countries.
• How to use such money? Consume it? Invest it?
35.0
Percent Change in Real GDP
30.0
25.0
15.0
10.0
5.0
0.0
2006
2005
CCER, Dr. Miaojie Yu
Investment
2004
Consumption
2003
GDP
2002
-20.0
2001
-15.0
2000
-10.0
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
-5.0
1980
Percentage Change
20.0
Trade Surplus is not necessarily good!
• Statistically, it is good for GDP calculation.
• But GDP does not mean anything!
• Export Booming and Productivity Improvement
– The termination of Multilateral Fiber Agreement (MFA) in 2005.
• Green GDP
The Far Cry from U.S. Workers
• Any essential link between the blue-worker
unemployment and trade deficit?
• No.
• The elasticity of substitution between Chinese export
and other Asian countries’ export is very high.
• The essential reason for huge unemployment is due to
the economy recession in years 2001-2003 in the U.S.
The Congressional Threat
• It is incredible.
• The U.S. does not have any right to terminate our
permanent MFN treatment.
• They don’t dare to uni-laterally impose high tariffs on
Chinese textile and garments.
– It violates the WTO principles.
– It worse the U.S. itself due to the elasticity of exports and
imports.
– It already gets historical lesson from the stupid policy.
RMB Appreciation Helps?
CCER, Dr. Miaojie Yu
RMB Appreciation Helps?
• China appreciates its RMB around 20% within 3
years
CCER, Dr. Miaojie Yu
RMB Appreciation Helps?
• Change in exchange rate might help reduce the
bilateral trade deficit, but cannot reduce the U.S.
whole deficit.
– Trading pattern in China and the ASEAN-10 are quite
similar.
– U.S. has to import similar products at a higher cost.
• The revaluation may not translate into significant
higher prices for Chinese products sold in the U.S.
– China firms may cut their profit margins to maintain their
price instead.
– Even if prices go up, U.S. consumers may be slow to switch
to competing producers from other countries, which causes
more trade deficit in the short run.
CCER, Dr. Miaojie Yu
What do we study in Trade?
• Gains from Trade
– Each trading country gains
– Within a country, some gain but some lose
• Pattern of Trade
– Who trade with whom for what?
– Inter-sectional v.s. intra-sectional trade
• Government Effect of Policy on Trade
• Multinational Cooperation and Foreign Direct
Investment (FDI)
Traditional Trade Theory
• Smith’s Absolute Advantage
• Ricardian Comparative Advantage
• Heckscher-Ohlin Theory
• Viner’s Specific Factors Model
• Krugman’s Increasing Returns to Scale Model
• Feenstra’s Product Variety Model
• Melitz’s Intra-industry Trade
Top 10 Research Topics (Theoretical & Empirical)
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Heckscher-Ohlin Model (Leontief Paradox)
Trade in Intermediate Goods, Wages, and Outsourcing
Increasing Returns and the Gravity Equation
Gains from Trade and Regional Trade Agreement
Import Tariffs and NTBs ( Dumping, Quotas, and Subsidies)
International Political Economy of Trade Policy
Trade and Endogenous Growth
Multinationals and Organization of the Firm
Trade and Environment
Trade and Geography
Top World-class Trade Economists
• Theory
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Bhagwati
Grossman
Helpman
Krugman
Staiger
Melitz
• Empirics
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Baldwin
Feenstra
Leamer
Trefler
Blonigen