Compare the advantages and disadvantages to China and the related countries as China expands, and what is the future of international trade?
1 Answer | Add Yours
China has been able to utilize its ability to be a low-cost producer to grow into an industrial superpower of sorts. It is the largest exporter of products to countries around the world and has a huge trade surplus.
But its present area of expertise has many limitations and it is not possible to sustain growth for too long with just this. The Chinese need to use their resources in a more optimum manner and change their international trade strategy.
They have started on this path by buying foreign companies and acquiring a controlling stake in many global brands. This is advantageous for the Chinese as it lets them sell products that they can manufacture at a low cost under brands that belong to them. It improves their margins and allows industrial expansion. Global acquisition helps them diversify and manage their financial situation in a better manner. It would help them deal with the problems that they are likely to face when the Chinese currency is no longer devalued.
A global expansion by China will provide capital for many companies that are presently facing financial crises. As China expands, it would also have to allow imports from other nations and in due course this will result in a free trade policy. The growing economy of China makes it an attractive market for other nations. The present challenges that stop them from exporting to China will gradually reduce as the Chinese expand with their policy of global expansion that has been started.
We’ve answered 317,410 questions. We can answer yours, too.Ask a question