China Price

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THE CHINA PRICE

ACKNOWLEDGEMENT

Our thanks are due to prof. Gitali Sarkar and other faculty members under whose able guidance and support I could successfully complete my project work. We thank them for their continuous support and valuable inputs for this project. We thank our family for providing the support that I needed from them to complete our project. Lastly, We would like to express my sincere thanks to all my MMS (Part I) colleagues who have helped me directly or indirectly in bringing this project to life.

EXECUTIVE SUMMARY

China’s import penetration in Chilean markets is higher in unskilled-labor intensive sectors as predicted by traditional endowment-based theories of comparative advantage. However, there is also evidence of within-industry specialization. In particular, high-income countries receive higher prices for its products, and Chinese products are not only cheaper in comparison to the world average but also relative to countries with similar income per capita. These price differences cannot account for the depth and sectoral distribution of China’s import penetration. The relative price of Chinese products have stayed relatively constant since the beginning of the 1990s, which means that factors other than price, like quality upgrading, productivity growth or the access of foreign direct investment are crucial to explain the Chinese import boom.

TABLE OF CONTENTS

SR. NO
TOPICS

Page No.
1
Introduction
6
2
7 Secrets to Business Success in China
8
3
Lessons that India should learn from China
13
4
China’s role in the global economy
15
5
China: Threat or Opportunity?
19
6
Cheap Chinese products boon or bane to India?
25
7
Labor laws in China
32
8
Cheap products at human cost
36
9
Why things in China are so Cheap?
42
10
Migrants contribution in China’s GDP
44
11
The China Price
46
12
Conclusion
54
13
Bibliography
57

INTRODUCTION

The huge increase in Chinese exports is a worldwide phenomenon. After several decades of autarky, Chinese exports have grown vigorously –especially since the 1990s– becoming one of the most important trading partners in the world. This phenomenon has generated a growing literature to analyze the potential impact of Chinese competition on third countries, especially in Labor-intensive industries where China’s exports are dominant. The literature on the characteristics of Chinese products is however less developed. We do not have a complete and broad view of the characteristics of China’s exports, which is crucial to have a good understanding of the potential effects of Chinese exports on world markets. There is evidence that China’s exports are higher in labor-intensive sectors –and we provide some evidence supporting such statement–, which is consistent with traditional endowment-based trade theory. The world is flat. When all the labors in China are used up, countries like Vietnam is not. Then the world factory will shift to other countries. Hopefully at that time, the domestic consumption of goods, and the hi-tech sector start to boom, and China can be still strong in exporting, and go to another "right path" for development. If not, it is dark cloud on the future sky of China.

China Price Rising; Can U.S., Others Capitalize?

This would seem to be a good time for an American manufacturing renaissance. The economics of global trade are starting to tilt back in favor of the U.S. to a degree unseen in a generation. Since 2002 the dollar has plunged by 30% against major world currencies and is falling against the yuan. Wages in China are rising 10% to 15% a year. And spiking oil prices are driving up shipping rates. The cost of sending a 40-foot container from Shanghai to San Diego has soared by 150%, to $5,500, since 2000.

American factories and supplier networks in many industries have withered in the era of globalization, so it will take lots of time and capital before the U.S. can become a big player...
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