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The Evolution of the Comparative Advantage Strategy in China

Author: LiHui
Tutor: WangBingCai
School: Tianjin University of Commerce
Course: International Trade
Keywords: comparative advantage theory comparative advantage strategy forging ahead strategy the advantage of backwardness competitive advantage
CLC: F752
Type: Master's thesis
Year: 2011
Downloads: 181
Quote: 0
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Abstract


This paper mainly analyses the role of comparative advantage in China’s economy. In the introduction part, it introduces the basis of the Research and literature review of the comparative advantage theory, then, leads to the aim of this paper: to analyze the evolution of comparative advantage strategy in China.Chapter two presents the earliest thoughts about comparative advantage theory. Trade during the ancient periods reflected the thoughts of absolute advantage, which was the embryonic stage of the comparative advantage theory in China. After the Opium War, China’s trade had a feature called "static comparative advantage". The comparative advantage either came from the differences of labor productivity or of resource endowment between the two countries.Chapter three analyses the economic situation from the founding of China to the year of 1978. Chinese leaders chose the economic strategy in which the heavy industry had a priority to develop first because of the special conditions and historical limitations. During this period, Chinese economy developed not very well for against the rules of the comparative advantage. The living standard of Chinese people has not been improved in quite a long period. Obviously, the failure of Chinese economy was due to its’disobey of the comparative advantage strategy. This is the stage of the inverse of comparative advantage.Chapter four introduces China’s economic development according to the reform and opening up policies. The soaring economy of Japan and "four small dragons" in Asian countries showed that there was also an economic strategy, which followed the principle of comparative advantage in each stage of its development, and was summed up as comparative advantage strategy. After the year of 1978, China has become the fastest growing economy in the world, which attributed to its’obey of the comparative advantage strategy. It is historically inevitable for China to choose the comparative advantage strategy.Nowadays, although comparative advantage strategy constantly suffers from all sorts of different theories and experiences, the challenge, it still exists as a leader of the international trade theory. Because of the interdependence of comparative advantage, the advantage of backwardness and competitive advantage, we should use the development strategy of comparative advantage as the main strategy, and give full play to the advantage of backwardness, urge the transformation from comparative advantage into competitive advantage, finally strengthen our country’s comprehensive national strength constantly.

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CLC: > Economic > Trade and Economic > States foreign trade > China's foreign trade
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