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8 The transformation and upgrading of processing trade and its impact on firms productivity Kunwang Li and Haoran HuIntroduction Since the beginning of the reform and openingup period, Chinas 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. Chinas export growth has been largely
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