The transformation and upgrading of processing trade and its impact on firms’ productivity

Abstract

Since the beginning of the reform and opening-up period, China’s foreign trade has become one of the important drivers of economic growth. The proportion of exports in total gross domestic product (GDP) increased from less than 4 per cent in the initial period of opening up to its highest value, of 34.5 per cent, in 2007. China’s export growth has been largely related to the rapid development of processing trade. Before the Global Financial Crisis (GFC), processing trade accounted for more than 50 per cent of China’s exports. Processing trade has made great contributions to employment, industrialisation and foreign trade in China.