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China’s Advantages in Production

In our day to day lives, the majority of the things we use are made in China. Whether its a computer, a piece of clothing, or a microwave; its made in China. This is attributed to a number of reasons. In our class, we have seen that understanding labor markets is essential to achieving efficiency. Countries will trade with the countries that produce goods at the cheapest costs that retain quality in their products. China has become the hub of manufacturing because it has cheap labor, low taxes on exports, and an efficient business ecosystem.

Since China is a very populated country, the supply of workers is greater than the demand for labor. As a result, wages are very low and production costs are lower than other countries. Additionally, China is not very strict on things such as child labor, safety regulations, and long shifts regulation. Low tax rates on exports further China’s advantage in manufacturing goods. To conclude, it is likely that China will remain “The world’s factory” due to the many advantages it has in manufacturing.

http://www.investopedia.com/articles/investing/102214/why-china-worlds-factory.asp

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The World’s Second Largest Economy

The following article reflects on China’s economy that seems to become even stronger day after day. This Saturday China announced a near-record trade surplus for October of $45.4 billion. Of course, there has been a combination of profound strategies behind such amazing numbers. On of them is “to allow more imports through trade agreements and more foreign investment”. Truly, on Monday China and its largest trading partner South Korea agreed on removing tariffs on 90% of goods. There is a chance that a similar agreement will be reached with Australia, a country that has more trade with China than with the U.S. Here comes another strategy undertaken by China: “strengthening financial ties with neighboring nations”. So far China is the largest trading partner for 17 out of 23 of its neighbors. It’s great to see that China uses the generated wealth to benefit society too by investing in infrastructure and natural resources development in the neighboring countries. On the contrary, monopolistic behavior, price collusion and bribery continue to occur in Chinese economy, especially with the state-owned enterprises.

Anastasiya Khlopina

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Global trade connections

This new graphic from The Brookings Institution connects with our discussion on the model of international trade. It shows trade connections between the 100 largest metropolitan areas in the US and international trade partners. The importance of domestic as well as international trade is evident.

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