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China's Changing Competitive Position: Lessons from a Unit-Labor- Cost-Based REER


  • Sebastian Dullien

    (Financial Times Deutschland)


This paper calculates a unit labor-cost based real effective exchange rate for China for the period 1987-2002. It examines carefully which data sources can be used given the known limitations of Chinese data and constructs to them together with internationally available unit labor cost estimations for a number of industrialized countries, including Korea and Taiwan. It is found that gauged by the ULC measure the increase in manufacturing competitiveness from the late 1980s to the mid 1990s has been even more remarkably than given known industrial-price- based measures for real effective exchange rates suggest. However, since then, Chinese manufacturers have lost more ground than previously thought.

Suggested Citation

  • Sebastian Dullien, 2005. "China's Changing Competitive Position: Lessons from a Unit-Labor- Cost-Based REER," International Trade 0502016, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0502016
    Note: Type of Document - pdf; pages: 10

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    References listed on IDEAS

    1. Luci Ellis, 2001. "Measuring the Real Exchange Rate: Pitfalls and Practicalities," RBA Research Discussion Papers rdp2001-04, Reserve Bank of Australia.
    2. Keidel, Albert, 2001. "China's GDP expenditure accounts," China Economic Review, Elsevier, vol. 12(4), pages 355-367.
    3. Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
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    Cited by:

    1. Vinh Nguyen Thi Thuy & Duong Trinh Thi Thuy, 2019. "The Impact of Exchange Rate Volatility on Exports in Vietnam: A Bounds Testing Approach," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 12(1), pages 1-14, January.
    2. Nowak-Lehmann D., Felicitas & Vollmer, Sebastian & Martínez-Zarzoso, Inmaculada, 2008. "Does comparative advantage make countries competitive? A comparison of China and Mexico," Center for European, Governance and Economic Development Research Discussion Papers 74, University of Goettingen, Department of Economics.
    3. repec:got:cegedp:74 is not listed on IDEAS

    More about this item


    China; international competitiveness; real exchange rate;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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