Honor’s Observation Of The Chinese Economy

Honor’s Observation Of The Chinese Economy Myths, misconceptions, and rumors.

Myths about business • Many westerners view China as an economic threat. • In 2006 China had overtaken the United States to become the worlds largest exporter of information and communications-technology goods. • Westerners have a tendency to fear outsourcing because it is believed that it will lower their standard of living. In some circumstances the search for more productive efficiency has caused fluctuations in equity. • • Many people fail to realize that a shift to low

Myths about business How does increased trade with China help everyone? As the utilization of the Chinese production sector advantages increase, the welfare of the society increases. This allows new opportunity for western firms to reach new markets for those goods that the firm’s specialize in.

Myths About Business Does China’s increasing presence in the world market threaten U.S. Businesses? • Over 60% of exports from China, are made by Foreign invested Companies. • China specializes in the production of cheap, high-volume goods, but because of the increased welfare of the society, the market for high quality goods is now developing and can be meet by western

A few more notes • China is a leading manufacturer in processing trade, consisting of over 45% of their exports. • Processing trade is when foreign producers send materials typically high tech components, into another country for the labor intensive portion of final production.

• Concerns over health and safety issues has lead to more regulation over whole process goods exported from China such as toys, clothing, and food. • The Chinese gov’t takes these concerns very seriously, and has recently executed the former head of the Chinese Food and Drug Administration for taking bribes from drug companies. • Whole process goods are those goods produced

China and the u.s. • Gross domestic product is the standard measurement of the overall market value of all final goods and services produced within a country in a given period of time. • U.S. GDP in 2007 was 13.84 trillion dollars • • • •

Labor force is around 155.2 million people Unemployment is currently 7.2 % GDP per capita (2007) is 45,725 dollars Average median household income is 50,233 dollars

China and the U.S. • China GDP in 2007 was 3.251 trillion • Labor force is around 800.7 million • Unemployment is 4% but may not reflect rural areas. • GDP per capita is 5,400 dollars • Annual family income possibly around 6,000 dollars but no substantial sources were found.

• The U.S. has almost 8.5 times the domestic productivity in market value than China per capita.

They took our jobs! • Many western workers in the manufacturing sector believe the use of outsourcing was the direct cause of their unemployment, and government policy has been shaped based on the protection of domestic sectors. At the same time China faced millions of job losses due to the restructuring of State-Owned enterprises. • The recent economic recession is not limited to the U.S. but can be greatly felt by our Economic codependent partner China. A video on the effects on the Chinese economy • Based on Liberal economic principle’s, argued for by economic front-runners Adam Smith and David Ricardo, specialization, competition, and free

Why trade with china is good. • Consider Wal-Mart the largest corporation in the world. They offer consumers prices that are incredibly low, simply because they pressure producers to uphold their slogan “everyday low prices,” increasing efficiency and focus. This approach increases consumer surplus. Wal-Mart in 2002 purchased over 12 billion dollars in Chinese imports. This consists of close to 10% of all Chinese exports to the U.S. This consumer surplus is argued to benefit the poorest of the population because it greatly increases their purchasing power.

Not everyone agrees • Certain advocacy groups are actively combating the Chinese-Wal-Mart system http://www.youtube.com/watch?v=Nx2ltoqyrEw http://www.youtube.com/watch?v=xEzm27Xjmmg

On the other hand Wal-Mart helps economies grow

http://video.google.com/videoplay?docid=73333864271388

One China • Many westerners fail to realize that the China mainland is a composition of many different areas with regional and local differences and is said to have over 200 languages and countless dialects. It has various different climates, foods, and lifestyles. These differences are as diverse as what is seen in Europe.

China

Definitions • Purchasing Power is the number of goods/services that can be purchased with a unit of currency. • Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it • Labor Force is the total number of workers, including both the employed and the unemployed

One last note • It is good to note that the economic growth that China has experienced in recent times should not be viewed as an emergence of the Chinese in the overall share of the World GDP. Less than 200 years ago the Chinese held over 30% of the total World GDP. According to The Economist, a popular periodical, during the 1820’s China held 33% of the world’s productivity.

Want more info U.S. Census Bureau http://www.census.gov/

Boyden Report (business periodical on western myths of China) http://www.boyden.com/media/96/the_boyden_report_china_/index.htm Los Angeles Times article (Chinese myths) http://www.howardwfrench.com/archives/2005/05/29/examining_the_myt Great video on the Great Wall of China http://video.google.com/videoplay?docid=7162767812282672062&ei=Xw