Evolutionary characteristics of China's intermediate manufactures

China's economic development is characterized by progressive integration with international production chains as an assembly producer. Japan and South Korea are the major partners providing intermediate products to China. The present paper analyzes the Chinese intermediate sector's present condition and evolutionary characteristics revealed in bilateral trade with Japan and South Korea. The analysis uses the framework of new trade theory represented by "intra-industry trade". Trade statistics from 1997 to 2004 are analyzed using the database published by the OECD. Results show that China's inter-industrial evolution is characterized by its expanding positioning in the manner of the flying geese development paradigm ofAsian countries. Furthermore, intra-industrial evolution is characterized by a concentration on price competitiveness. The framework and results of the industrial analysis presented in this paper assist in the understanding of China's manufacturing evolution and of the policy-making decisions taken in the process.