International trade, as a major factor of openness, has made an increasingly significant
contribution to economic growth. Chinese international trade has experienced rapid
expansion together with its dramatic economic growth which has made the country to target
the world as its market. This research discusses the role of international trade in China’s
economic growth. It starts with a review of conceptions as well as the evolution of China’s
international trade regime and the policy that China has taken in favor of trade sectors. In
addition, China’s international trade performance is analyzed extensively. This research then
evaluates the effects of international trade on China’s economic growth through examining
improvement in productivity. Both econometric and non-parametric approaches are applied
based on a 6-year balanced panel data of 31 provinces of China from 2002 to 2007. For the
econometric approach, a stochastic frontier production function is estimated and province
specific determinants of inefficiency in trade identified. For the non-parametric approach, the
Divisia index of each province/region is calculated to be used as the benchmark. The study
demonstrates that increasing participation in the global trade helps China reap the static and
dynamic benefits, stimulating rapid national economic growth. Both international trade
volume and trade structure towards high-tech exports result in positive effects on China’s
regional productivity. The eastern region of China has been developing most rapidly while the
central and western provinces have been lagging behind in terms of both economic growth
and participation in international trade. Policy implications are drawn from the empirical
results accordingly.