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UKO Study of the Impact of China's Foreign Trade on the Industry's Income Inequality

UKO Study of the Impact of China's Foreign Trade on the Industry's Income Inequality

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Zhuzhou UKO Precision Carbide Co.,Ltd did a Study of industry’s income inequality due to foreign trade from the experience of exporting its tungsten carbide products like Tungsten Carbide Cold Rollers, Tungsten Carbide Rods&Plates, Tungsten Carbide Wire Drawing Dies to 48 countries since 2008. With the increasing deepening of reform, China's foreign trade has experienced a sustainable expansion. With the developed speed of China's foreign trade ,the gap of income between different industries shows a trend of further expansion which attracts the attention of the society.


Does the foreign trade have any influence on the industry's income inequality level?If it does,how does the foreign trade influence the inequality?How much is the influence?


On the basis of reviewing the theories of trade on income distribution thoroughly,the dissertation demonstrates the impacts of China's foreign trade on Industry's Income Inequality with much empirical analysis.


UKO’s research mainly includes the main contents and views about several aspects:


(1) We have to systematically expounds the development of China's foreign trade and the the present situation of Industry's Income Inequality ,including the historical evolution process of China's foreign trade、the main characteristics of China's foreign trade and the development of China's foreign trade status,and the characteristics of Industry's Income Inequality. so as to provide a theoretical background and analysis point for further studies.


(2) The impacts of China's foreign trade on Industry's Income Inequality with much empirical analysis.First, the impacts of China's foreign trade on Industry's Income Inequality with much experience analysis.By collecting the data of the income between different industries,we analyse how foreign trade effect Industry's Income Inequality.And then, Referring to the theoretical analysis of foreign scholars,the author builds an innovation-imitation model to describe the endogenous relationship between the three variables in the south-north trade system.The model shows that technological progress means increasing the varieties of exports for the South in south-north trade.Supposing the manufacture industry as the skilled workers intensive industry with higher openness,the author uses the data from the manufacture industry and tests the impact of trade on wage inequality. The estimation reports a positive correlation between trade and wage inequality, which suggests increased exports of manufacturing products expand the demand of skilled workers in manufacture industry,and raise the level of wage.


(3) Due to investigation, from 1985 to now,all the industry income's levels have been promoted,since the divergence of the speed and extent,the gap of income is enlarged.On the whole,the equal industry income is higher in eastern region than in western. the dissertation provides a powerful argument about the impacts of foreign trade on China's rising income inequality through different mechanisms. Therefore,it is necessary that China's development strategy and trade policies pay more attention to the center and west regions to reduce the regional inequality.Some industry policies and open policies should be implemented to encourage less-developed industries such as agriculture to enter the international market and to form a multi-participant trade mode in order to reduce wage income inequality.Meanwhile,a more democratic decision-making process of trade policy is desirable.