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Chinese Trade Expansion and Development and Growth in Today's World


  • Henry Wan Jr.


The current Chinese trade expansion brings benefit to many parties, both outside and inside the Chinese Mainland. It also poses huge challenges to others, in foreign countries, also in China. The event is important for its own sake, but also what it implies when rapid growth happens to countries large in population and size (including India, Russia, Brazil). It has to be understood in context. Conventional wisdom in economics and popular explanations cannot explain Chinese growth, let alone its implications. Only with suitable adaptations of what the economic discipline has to offer, can one assess the nature of what we observe and the policy measures needed for today. Like other episodes after Industrial Revolution, the late industrialization in China also relies on outside technology, often gained through trade and foreign investment. Because of the de-colonization after 1945, such growth can succeed even with scanty domestic resource. Like other East Asian economies, participation in cross border supply chains along its neighbors offers China an effective entrée. What makes China different from the other East Asian economies is size. The presence of a huge labor reserve keeps wage down, profit up, attracts foreign investment coming with technology, but may also lead to deteriorated terms of trade and income inequality at home, de-industrialization and the loss of development opportunities abroad, also resource shortage and environment damage, some of these are irreversible in nature. Over all, the development is the result of efficiency gain, which is basically desirable. It takes international cooperation to steer such development toward mutually beneficial paths. It is also desirable for China to accelerate job creation at home and avoid irreversible environment harm. These are well recognized by Chinese decision makers. More can be done.

Suggested Citation

  • Henry Wan Jr., 2005. "Chinese Trade Expansion and Development and Growth in Today's World," DEGIT Conference Papers c010_004, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c010_004

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