Social Sciences in China (Chinese Edition)

No.3, 2014

 

The Mystery of Changes in the Quality of China’s Exports: A Micro-level Explanation Based on Market Entry

(Abstract)

 

Li Kunwang, Jiang Wei and Song Ligang

 

This article uses the HS8 Code of China Customs Statistics for 2000-2006 to analyze the micro-level mechanisms underlying changes in the quality of China’s exports from the perspective of market entry. We find that entry of new export relationships is the biggest force driving rapid export growth, but the quality of these newly entered export relationships is far lower than the market average. With regard to method of market entry, export companies in China, especially private companies and those in the eastern region, tend to enter the market through price competition. The fact that a large number of low quality export relationships are entering the market is the main reason for the sustained fall in the quality of export goods. To accelerate the transformation of China’s foreign trade development mode, it is imperative to change from traditional competition on price to non-price competition centered on quality upgrading.