An Empirical Study on Relations between Intra-Industry Trade in Chinese Manufacturing and Economic Growth

The role of intra-industry trade in the contemporary international trade is becoming increasingly prominent. This paper focused on relations between intra-industry trade in Chinese manufacturing and Chinese economic growth. The main methodologies used were Cointegration Regression, Error Correction Model, Granger Causality Test and Variance Decomposition. Through empirical analysis, we found that economic growth was positively related to Intra-Industry Trade in Chinese manufacturing both in the long term and in the short time; the relations between intra-industry trade and economic growth were a two-way Granger causality. Finally, we depicted the mutual contribution rates between them.