China’s Exports: A Brief Overview.

Dani Rodrik, a famous Harvard international economics professor, wrote an article titled “What’s So Special About China’s Exports” in the China and World Economy Journal.

Rodrik posits that taking a country’s per-capita GDP level and comparing it to the quality of its products exported (using internationally accepted 6-digit commodity indicators), then comparing the results to the per-capita GDP of like-quality exporting nations, one can assess whether or not a country is performing above or below expected technological levels. He refers to the product quality / PPP ratio as the EXPY ratio.

In other words, is China exporting more advanced levels of product than its per-capita GDP indicates is reasonable? His research, which is well explained and appears very accurate on its face, indicates that China has not only advanced at a high rate since opening its doors in the late 70s, but has actually risen to a level of productive know-how that far surpasses where it should be in relation to its per-capita GDP. China’s protection of its domestic market, attractive labor costs, low fixed capital costs, policies requiring joint venture agreements from sources of FDI and the tax breaks afforded to foreign investors all led to the development of productive capabilities that far overshot expectations given its income levels.

Fundamentally, a country that exports products at increasingly higher technologically-advanced levels will experience higher per-capita GDP and a more stabilized market. But he argues at the end of the article that China will soon reach a glass ceiling of sorts as its ability to continue producing more advanced-quality products will require higher levels of entrepreneurial R&D and better IPR protections than the country currently offers. Government policies will need to change in order for China’s growth to avoid stagnating.

I firmly agree with Rodrik’s arguments regarding China’s development. I believe that understanding the history of China’s economic policy makes determining challenges to its continued development and the steps it must necessarily take to remain competitive an easier task. Looking at Rodrik’s assessment of China’s current quality-level of productivity in relation to its per-capita income points to a need for economic policies more aligned with a fully-developed country than one still maturing. This indicates that over the next decade, should China want to maintain a minimum growth rate of 6.5% (stated as necessary by government officials to continue providing new jobs for its migrating work force) it must focus on introducing policies more protective of IPR issues and supportive of R&D initiatives.

Cited Works:
“What’s So Special About China’s Exports?” China & World Economy, vol. 14. no. 5, September-October, 2006, 1-19.

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