China's competitive advantage

Jul 05, 2011

Research from Jack McCann of Lincoln Memorial University, in Tennessee, suggests that China could become the dominant economic power within a few years if it exploits the competitive advantages it is creating politically, culturally, legally and economically.

Writing in the current issue of the International Journal of Sustainable Strategic Management, Jack McCann suggests that China's business and political leaders have long worked to build strong relationships with developing countries. However, it is strengthening of its global political presence that is closely aligned with economic expansion, which could lead to a sustainable dominant position in the world.

The Chinese Communist Party has governed for the past 55 years and remains secure in its position as the sole political party in China. Despite its seeming inability to respond with ease to changes in Chinese society, the Party has nevertheless witnessed an average annual growth of about 10% for nearly two decades and unique stability during the current world economic crises. Indeed, China's merchandise trade has been growing at about 14%, three times faster than world trade, making China the third largest economy as of 2008.

"On paper, globalization poses the long-term potential to raise living standards and reduce the costs of goods and services for people everywhere," says McCann. However, globalization does not mean equitability. China currently produces almost three-quarters of the world's today, nearly two-thirds of its bicycles, a third of its and air conditioners, and half of the world's microwave ovens. "China's pool of cheap labor may dominate world labor markets for decades, giving it a monopoly on cheaply manufactured goods," McCann explains.

There is an intriguing undercurrent to China's development and trade practices that concerns those in the West. "Competitive strategies, currency manipulation, and piracy of intellectual property are causing concern in the and creating protectionist reactions in many countries," adds McCann. It is interesting to note that as China utilizes its various competitive advantages, not least those ethical considerations, it has in recent years become the world's second-largest oil consumer after the US while the US trade deficit with China increases year after year into the hundreds of billions of dollars. Globalization has wrought new opportunities for many nations. China is no different than any other in attempting to make the most of this emerging world order.

Explore further: Rapid UK population growth undermines living standards, but may be necessary for economic growth

More information: "The Chinese competitive advantage" in Int. J. Sustainable Strategic Management, 2011, 3, 1-12

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Squirrel
4 / 5 (4) Jul 05, 2011
"China's business and political leaders have long worked to build strong relationships with developing countries... that is closely aligned with economic expansion, which could lead to a sustainable dominant position in the world."

Unlike the US that wasted a decade going after a nonthreat in Iran and so created an opportunity for China.
epsi00
5 / 5 (2) Jul 05, 2011
The US prefers to show its muscle and to engage in numerous murderous wars against mainly Muslim nations ( Iraq, Afghanistan, Yemen, Somalia and now Libya and more in the future )so that it can install puppets and get access to natural resources ( oil, uranium...) while off-shoring its manufacturing capacity to China. The US basically is helping China become the giant that will bring it down. I am all for it if it means no wars.
EWH
4 / 5 (1) Jul 05, 2011
China's growth is not sustainable. They are already facing increasing competition for low-wage industry. China will have to develop its own internal markets soon as the rest of the world can no longer afford to buy China's volume of production, and this external demand shortfall will only grow as China's output grows and other countries' industries are destroyed by Chinese imports.

This article seems to adopt the usual slant - China has "competitive strategies" while the rest of the world has "protectionist reactions". In reality, China is quite protectionist, protectionism has a competitive advantage and mercantilism when pursued intelligently leads to absolute advantage. China is in the business of "dumping" labor and competing by irresponsibly evading or ignoring the externalities of pollution and abuses of workers. To level the field, tariffs must compensate for and penalize these failures to account for externalities. This will correct wages worldwide to reflect productivity.
ryggesogn2
1.8 / 5 (10) Jul 05, 2011
Remember when the experts said Japan, Inc would take over the world?
dirk_bruere
1 / 5 (2) Jul 05, 2011
Show you what happens when a government makes sure that big business does what's best for their people instead of the bottom line of the accounts.
emsquared
5 / 5 (2) Jul 05, 2011
Show you what happens when a government makes sure that big business does what's best for their people instead of the bottom line of the accounts.

Oh yea, China's gov't run tobacco industry and mining industry totally have their people first in mind (please note, China has had an "OSHA" for all of 7 years or so)... Google "china income disparity" and/or "china occupational health and safety" then come talk to us about how great what they're doing is. They're creating a corporate-state plutocracy just as surely as the US has. Only difference is they're going to have a billion very unhappy people at the end of it.

Granted they have cut their poverty rates drastically (according to their gov't), like others here suggest, they face a tremendous task in sustaining that as the world market grows more competitive/less friendly.
paulthebassguy
2.1 / 5 (14) Jul 05, 2011
There is no limit to what a country can achieve with an under valued, over explioted workforce (while it lasts, that is).

That's how Britian funded their huge growth to become the dominant global empire during the 17 - 1800s, and is currently China's main advantage.

History has shown with other countries that once a certain point of prosperity is reached the workforce will expect more pay. It's only a matter of time until this happens in China and their current strategy of underclass oppression is, again, proven by history to be unsustainable.
astro_optics
3.3 / 5 (3) Jul 05, 2011
China is in a single sided Economic Cold War with the rest of the world, and it's winning... Just stating the obvious. As long as they are not in a military war, all is good ha?
rwinners
2.7 / 5 (3) Jul 05, 2011
Garbonza beans. There is a simple answer to China and the Chinese are aware of it, as are the Indians. Import tariffs.
The US could easily turn inward, redevelop it's manufacturing base and largely take care of it's own needs it it chose to. The damage to developing nations would be great, but...
frajo
2.5 / 5 (2) Jul 06, 2011
There is no limit to what a country can achieve with an under valued, over explioted workforce (while it lasts, that is).

That's how Britian funded their huge growth to become the dominant global empire during the 17 - 1800s, and is currently China's main advantage.

Some small reminders: Opium wars, British Empire, military on other continent.
The British, together with the French, are just now fighting again a colonialist war in another continent. China doesn't.
Don't try to compare the incomparable.
epsi00
4 / 5 (3) Jul 06, 2011
The British, together with the French, are just now fighting again a colonialist war in another continent. China doesn't.
Don't try to compare the incomparable.


Yet in Britain and in France cuts to programs of all kind are being implemented. No money for education, health care, pensions, research...but a lot of money for colonial wars. Same in the US. No wonder the economy of these countries are tanking.