Overview

China has established itself as one of the key players in the international trade and investment arena in the world. The country has surpassed Germany and the United States to become the world’s largest exporter. China also has become the world’s second largest recipient of foreign direct investment (FDI) as well as the largest source of outward FDI (if Hong Kong is included).  The significant driver of China’s original integration into the global economy was its export-led growth strategy. Since the onset of its open-door policy in the early 1980s, China has made attraction of export-oriented FDI an essential element of its development strategy. As production prices have surged and growth rates have dropped in recent years, China’s export-led growth model based on low costs is widely seen as outdated.

Rising land and labor costs (especially in the coastal area), tightening regulations (such as environmental regulations) and currency appreciation have gradually eroded China’s comparative advantage in low-skilled exports. If China is to avoid a middle-income trap, scholars believe that Chinese firms will need to move into in higher-value-added and higher-skilled activities, and the economy should be re-balanced by moving from an export-led growth strategy towards a consumption-led growth model.

Participation and Submission

Important Notes