Abstract:

This study examines the characteristics and the shifting structure of the extent of China's intra–industry trade (IIT) in automobile parts and components. As first suggested by Balassa, intra–industry trade means the two way exchange of similar products. Traditional theory takes IIT as a special phenomenon in trade flows among industrialized economies with similar economic situation. "This study gauges the extent of IIT in China's emerging automobile industry. The results show that there is a geographic bias of China's IIT. The extent of China's IIT with Asia and with North America is higher compared to those between China and other regions. However, also China's IIT with Europe, Central and South America has been increasing dramatically over the last decade. It suggests that China is a part of regional cooperation in Asia. But also China's part of the global value chain is emerging to a higher extent than ever.

Keywords: intra–industry trade, automotive parts and components, fragmentation, vertical specialization