Chinese bilateral intra-industry trade with her major trading partners

Abstract

The purpose of this thesis is to research the characteristics and determinants of Chinese bilateral intra-industry trade over the 1992-2010 reforming periods. Total intra-industry trade (TIIT), vertical intra-industry trade (VIIT) and horizontal intra-industry trade (HIIT) are computed and the determinants of each type of the intra-industry trade are found. Major determinants are foreign direct investment, economic size, trade composition, consumer preference, geographical distance, openness and trade liberalization policies. Vertical intra-industry trade is larger than horizontal intra-industry trade in China because the country’s major trading partners have a different factor endowment and technological capability from China.