Chinese Bilateral Intra-Industry Trade with Her Major Trading Partners: A Case Study of Japan, Korea, United States, European Union, Hong Kong and Taiwan

Abstract

The purpose of this paper is to examine the features and determinants of Chinese intra-industry trade during the 1992-2010 transition periods for China’s primary trade partners. We disentangle total intra-industry trade into vertical intra-industry trade and horizontal intra-industry trade, using data at the harmonization system level. The results of our sets of estimations suggest that China’s HIIT is more likely to emerge with countries that are similar than with those that are different. Conversely, China’s VIIT happens more with different rather than with similar countries. And in the intra-industry trade, the vertical intra-industry trade takes the central stage since existing wide gap of technology and management of corporations between the interior of China and major trading partners.