...Case 2: CHINESE MERCANTILISM Text 1. Chinese New Year China has become a major financial and trade power. But it doesn’t act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory. Here’s how it works: Unlike the dollar, the euro or the yen, whose values fluctuate freely, China’s currency is pegged by official policy at about 6.8 yuan to the dollar. At this exchange rate, Chinese manufacturing has a large cost advantage over its rivals, leading to huge trade surpluses. Under normal circumstances, the inflow of dollars from those surpluses would push up the value of China’s currency, unless it was offset by private investors heading the other way. And private investors are trying to get into China, not out of it. But China’s government restricts capital inflows, even as it buys up dollars and parks them abroad, adding to a $2 trillion-plus hoard of foreign exchange reserves. This policy is good for China’s export-oriented state-industrial complex, not so good for Chinese consumers. But what about the rest of us? In the past, China’s accumulation of foreign reserves, many of which were invested in American bonds, was arguably doing us a favor by keeping interest rates low — although what we did with those low interest rates was mainly to inflate a housing bubble. But right now the world is awash in cheap money, looking for someplace to...
Words: 2565 - Pages: 11
...Case Study #2: Non-tariff Barriers to International Trade ------------------------------------------------- Bear on the move Located in Guangdong, China’s richest province, Xianda Co. is a toy company that has been manufacturing toys since the onset of Guangdong’s economic boom in the early 1990s. While Xianda Co. is now a major manufacturer for a number of multinational toy companies, it began by designing and manufacturing its own line of dolls, teddy bears, puppets and building blocks based on its trademark character “Xia the Panda Bear”. Xia’s popularity was initially limited mostly to China’s mainland until late 2002; a year after China joined the WTO. In 2002, Xianda Co. saw a surge in demands for Xia products start in France, spread throughout Europe and North America, and move into South America. Today, Brazil is Xianda Co.’s biggest export market for Xia goods, and Xia’s popularity in Brazil alone accounts for 19 percent of worldwide Xia sales and 2 percent of Xianda Co.’s manufacturing output. Since 2003, Xia the Panda Bear has become the most popular toy in Brazilian history. A bear market A media frenzy of confirmed cases and unconfirmed speculation pertaining to China’s use of hazardous materials (for example, lead paint and potentially carcinogenic plastic and rubbers) to manufacture toys cheaply, sparked consumer panic around the globe. In response, the Brazilian government ordered all Xia goods pulled from store shelves and banned further toy imports...
Words: 582 - Pages: 3
...BOFIT Discussion Papers 15 • 2011 John Knight and Wei Wang China's macroeconomic imbalances: Causes and consequences Bank of Finland, BOFIT Institute for Economies in Transition BOFIT Discussion Papers Editor-in-Chief Laura Solanko BOFIT Discussion Papers 15/2011 20.06.2011 John Knight and Wei Wang: China's macroeconomic imbalances: Causes and consequences ISBN 978-952-462-711-5 ISSN 1456-5889 (online) This paper can be downloaded without charge from http://www.bof.fi/bofit. Suomen Pankki Helsinki 2011 BOFIT- Institute for Economies in Transition Bank of Finland BOFIT Discussion Papers 15/ 2011 Contents Abstract ................................................................................................................................ iii Tiivistelmä ........................................................................................................................... iv 1. Introduction ....................................................................................................................... 1 2. China’s macroeconomic imbalances ................................................................................. 2 3. China’s external imbalance ............................................................................................. 14 4. Reviewing the export surplus .......................................................................................... 22 5. The external surplus and foreign exchange reserves .......
Words: 13756 - Pages: 56
...1 The Impact of China-Africa Trade Relations: The Case of Angola By Dr Ron Sandrey Associate Trade Law Centre of Southern Africa Prepared for the African Economic Research Consortium Nairobi, Kenya November 2009 2 Acknowledgements The author would like to thank Hannah Edinger, Research Fellow, China Africa Network, Centre for Business and Academic Research, Gordon Institute of Business Science, University of Pretoria; and Senior Manager & Head of Research at Frontier Advisory, for comments on a previous draft, and for research and editorial assistance. The author would also like to express gratitude to the African Economic Research Consortium for commissioning the research paper. 3 Table of Contents 1. Introduction……………………………………………………………………. 4 1.1 Problem Statement…………………………………………………………………... 4 1.2 Objectives of Report……………………………………………………………….… 5 1.3 Overview of Report……………………………………………………………….….. 7 2. Background………………………………………………………………….… 9 2.1 Angola & China Country Snapshots and the background trading relationship………………………………………………………………………….… 9 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.2.1 2.2.2 2.2.3 Angola – A Country Snapshot………………………………………………………….…. China – A Country Snapshot……………………………………………………………… Angola’s trade profile………………………………………………………………………. Angola’s trade profile with China…………………………………………………………. Angola’s other trade partners……………………………………………………………… Who are the gainers and losers from Angola’s increasing merchandise trade flows...
Words: 27003 - Pages: 109
...growth of public and private consumption. For the United States, a reduction in the external deficit has been associated with an extreme contraction of domestic investment rather than increased saving. It is noteworthy that the economic trade between the two countries has become even more unbalanced than in the years before the recession, and the bilateral deficit now accounts for two-thirds of the U.S. global current account deficit. The concluding section argues that further reduction in the trade deficit through the expansion of U.S. exporting capabilities is critical to its future performance. The section discusses policy changes that would slow the process of shifting production facilities out of the United States and promote improved export competitiveness. Those measures include further devaluation of the dollar, reform of corporate taxation, and increased investments in education and physical infrastructure. 2. Chinese American Economy A. For many years the economic dialogue between American and Chinese economic officials has centered...
Words: 6060 - Pages: 25
...Research Assignment: “Asia’s performance during the global financial crisis has highlighted its flexibility. This flexibility, in part, arises from transformations undertaken in response to the Asian financial crisis a decade earlier.” Student Name: Eric Rodrigues Student Name: Mehmet Edib Unal Introduction The Asian Financial Crisis occurred during the year 1997-1998, and is explained well in brief by Galina Hale “East Asian countries experienced severe banking crises. Nonperforming loan ratios skyrocketed because of prior excessive risk taking and most banks had to be recapitalized by their governments.” (Hale 2011, p.3) After ten years, The Asian Financial Crisis was followed by The Global Financial Crisis in 2008. “The precise genesis of the global crisis remains subject to debate. (Lin 2012, Treichel 2012, p.3) “We will argue that global imbalances were the result of the large excess demand in the U.S. over an extended period—the financing of which was made possible by the reserve currency status of the US dollar. “This excess demand resulted from both the public debt” and “the overconsumption by households.” (Lin 2012, Treichel 2012, p.3) “As shock waves of the global financial crisis (GFC) reached East Asia in autumn 2008 immediately after the collapse of Lehman Brothers in September, the region faced the task of evaluating and reassessing the economic cooperation efforts of the previous ten years” (Katada 2011, p.274) Thus by evaluating and reassessing...
Words: 4023 - Pages: 17
...Bandi Mohit Sai Kumar MBA-IB, Sec: A 1226112109 The World's Greatest Coal Arbitrage: China's Coal Import Behavior and Implications for the Global Coal Market Summary China is home to the world’s second largest proven coal reserves after the United States. In addition, prior to 2009, China was a net coal exporter. Coal is a cornerstone of the Chinese economy, representing 77 percent of China’s primary energy production and fueling almost 80 percent of its electricity. Moreover, China is the world’s top coal consumer, accounting for nearly half of global consumption in 2010. Over the past decade, China’s domestic coal output has more than doubled while its coal imports have increased by a factor of 60—the country’s dependence on other nations’ coal exports is growing. In 2009, the global coal market witnessed a dramatic realignment as China burst onto the scene, importing coal from as far away as Colombia and the United States. With 182 million tons (Mt) of coal sourced from overseas suppliers in 2011, China has overtaken Japan as the world’s top coal importer. Moreover, as the world’s top coal consumer, China’s imports could rise significantly again by 2015. China’s recent move from being a net coal exporter to a net coal importer portends significant changes on the global stage, especially in terms of climate change. Understanding China’s rising coal imports is crucial for managing their global impact. Introduction In 2009 the global coal market witnessed one of the...
Words: 1893 - Pages: 8
...that reveal the extent of trade between China and Africa since 2000. The specific statistics center around the amount of natural resources exported to China and compares that to the amount of imports from China. After gaining insight into the extent of business between the two, one can begin to understand why Africa is so important to China. This importance is discussed in more detail against the backdrop of the historical background of these two regions. The following section explains the strategy that China has adapted to trade with Africa and introduces the concept of the “Chinese Model”. This model highlights the driving forces behind China’s strategic decisions and introduces some controversial arguments around some of the methods that China has adopted. An important part of this discussion is the comparison of China’s strategy with that of the West (i.e. regions like the United States of America (USA/US) and the European Union (EU). Some interesting statistics reveal that Africa is attracting significant amounts of Foreign Direct Investment (FDI) and is most likely to continue doing so. 1. Analyse and Discuss the Extent of Trade between China and Africa since 2000. (Jones S. 2012; Alessi C. 2012; China Daily.Com 2011; African Development Bank 2011; The Forum on China-Africa Cooperation 2011) China will overtake the United States of America (USA/US) as the world’s largest trade partner by.2016. (Jones, S. 2012). China is Africa’s...
Words: 5597 - Pages: 23
...Business SUPPORT DOCUMENT I - CASE STUDIES The texts making-up this document review and emphasize significant issues covered during the sessions. The questions asked at the beginning of each set of texts are meant to help students identify the issues that they should pay attention to. Students will work in teams on one single case study (see class outline for number of students per team). Each team will produce a presentation slideshow of its case study (7-10 slides per presentation, depending on the size of the case). Slideshows will be presented orally during sessions, according to the class outline (1520mn per presentation). Each team member will actively participate in his/her team presentation. Page 1 of 35 012-IBE-CaseStudies.docx CONTENTS Case Study 1. Text 1. Text 2. Text 3. Case Study 2. Text 4. Case Study 3. Text 5. Text 6. Text 7. Case Study 4. Text 8. Text 9. Text 10. Text 11. Text 12. Text 13. Case Study 5. Text 14. Text 15. Text 16. Text 17. Text 18. Text 19. Case Study 6. Text 20. Text 21. Case Study 7. Text 22. Text 23. Text 24. Text 25. Chinese Mercantilism .................................................................................................... 3 Chinese New Year .......................................................................................................... 3 China: the spend is nigh ................................................................................................. 4 Dealing With China’s Troubles ...................
Words: 18376 - Pages: 74
...Fancheng Wang Professor Steven Cassedy MMW 22 A10 March 16, 2012 One-child Policy in China China’s one-child policy, one of the most controversial policies, has been intensely changing China’s social structure since 1979. This policy worked as a milestone on controlling the mass amount of population and had a profound impact on all aspects of Chinese’s life. Apparently, it decelerates the growth rate of population; otherwise, there could be 23 million newborns in China annually (Shanor 53). To some extent, this policy relieves a comparative land shortage under the mass population in the countryside (Davin 65). In addition, it raises the average level of education and health care in the city because parents are likely to put more effort into taking care of the only child in the household (Kane 109). Despite its marvelous success in both the city and countryside, some scholars are concerned with the side effects tied to this policy, such as “little emperors”, labor force shortage and an aging society, which will only escalate in the future (Shanor 54). Although this policy impact on people's lives are good or bad cannot draw a conclusion, but through some social problems, it is not hard to foresee the future of this policy having negative influence on the only-child’s different stages of age. Since the first generation of children under this policy have already reached their thirties and have become part of the mainstream society, these side effects have gradually impacted...
Words: 3548 - Pages: 15
...in all of its formats (Carrefour Foundation Annual Report, 2010) China is an Asian country, with two states currently claim to have sovereignty: the People's Republic of China, which controls 99.6% of its territory and the Republic of China, which only controls Taiwan. It’s only in 2008, that the two governments united, have agreed for a more cooperative atmosphere (BBC Monitoring, 2014) Currently, China is the most populated country in the world with around a population of 1.33 billion. China has 20 cities with more than 5 million of people and 100 cities with over 1 million people. In the period of 2011 and 2015 China’s annual average GDP growth is predicted to be 9.5%. China is the largest growing GDP per capita in the world (Rodgers, 2012) China is a country with the world’s largest exports and the second largest imports of goods, since Chinese economic boom more opened up for Western companies, massive global companies are entering Chinese market (Rodgers, 2012). To enter in China market; Carrefour needs to ask itself multiple strategic questions such as; “what are the key political factors? What are the important economic factors? What cultural aspects are most important?...
Words: 1475 - Pages: 6
...From the rich walnut paneling and carved arches to the molded Italian Renaissance patterns on the ceiling, the circa 1925 council chamber room of Akron's municipal hall evokes a time when the America's manufacturing heartland was at the peak of its power. But when the U.S.-China Economic & Security Review Commission, a congressionally appointed panel, convened there on Sept. 23, it was not to discuss power but decline. One after another, economists, union officials, and small manufacturers took the microphone to describe the devastation Chinese competitors are inflicting on U.S. industries, from kitchenware and car tires to electronic circuit boards. These aren't stories of mundane sunset industries equipped with antiquated technology. David W. Johnson, CEO of 92-year-old Summitville Tiles Inc. in Summitville, Ohio, described how imports forced him to shut a state-of-the-art, $120 million tilemaking plant four football fields long, sending Summitville into Chapter 11 bankruptcy protection. Now, a tenfold surge in high-quality Chinese imports at "below our manufacturing costs" threatens to polish Summitville off. Makers of precision machine tools and plastic molds -- essential supports of America's industrial architecture -- told how their business has shrunk as home-appliance makers have shifted manufacturing from Ohio to China. Despite buying the best computer-controlled gear, Douglas S. Bartlett reported that at his Cary (Ill.)-based Bartlett Manufacturing Co., a maker of...
Words: 3946 - Pages: 16
... December 5, 2011 SUNY EMPIRE STATE Kingsley: Beijing Foreign policy in West Africa 1 Contents Executive Summary Concept and Assumptions Methods of Argumentation Theoretical and Policy Prescriptions Conclusion References Kingsley: Beijing Foreign policy in West Africa 2 Executive Summary China's increase involvement in West Africa over the past decade is one of the most significant recent developments in the region. It appears to redirect the idea of marginalization of West Africa and Africa as a continent, which brings significant political consequences. Beijing's West Africa interest is part of a recently more active strategy based on its booming economic growth, the need to search for a new source of raw materials, and a new source to market its manufactured goods. Beijing more recent policy practice in West Africa has been the one of multi-polarity and non-intervention. As a global demand for energy continues to rise, major economic powerful nations like China, the United States, the European...
Words: 6084 - Pages: 25
...the past three decades of fast growth, China has undergone tremendous structural changes in its economy and financial system. This chapter examines China’s evolving financial landscape so as to assess whether it can catch up with or even drive economic growth. China has achieved remarkable growth over the past quarter of a century despite a relatively inefficient financial system. Just as the public sector around the world has not proved to be an efficient manager of enterprises, it also has not been an efficient manager of banks. A solution that would seem to work in theory would be to grow the private sector’s role in the banking system, using banks that operate on market principles as a way to continually starve inefficient enterprises of credit, while supplying credit to the productive enterprises. Finding a way to make this work in practice will require both finesse and good fortune on a scale commensurate with China’s growing importance in the world economy. Keywords Bank Á Banking sector Á Financial market Á Big Four Á GDP Á Economic growth Á Financial system Á Trade Á Renminbi Á Exchange rate Á India Á Foreign exchange reserve Á Non-performing loan 1 Introduction China has captured the attention of the world with its unprecedented growth for such a big country during the past 30 years. At an average rate of 9.7%, China’s GDP has grown almost three times the world average. In 2007, China was the fourth largest country in the world, behind only the United States, Japan...
Words: 16066 - Pages: 65
...THE INTERNET ON INTERNATIONAL BUSINESS? WHICH COUNTRY WILL GAIN AS INTERNATIONAL BUSINESS THRIVE ON WWW? 1.0 EXECUTIVE SUMMARY Internet enhance migrate businesses to drive globally. Internet impacts on international businesses are huge. This study will conduct the positive and negative factors impacting international businesses. Internet effects the businesses in positive and negative sight. Internet usage in the world is migrate users to save cost of travel, fast communication and expand business market globally. Internet disadvantages are created by irresponsible users. Internet disadvantages explanation are about malwares, spamming, identity theft and unable to solve conflicts. This study examines the impact of the internet on international businesses. The findings concerns on the country that will gain as international business thrive on World Wide Web (WWW). 2.0 INTRODUCTION International business is playing a huge role in today’s economy. Everyone is taking part in international business. Larger and smaller businesses become global businesses. Business transaction between two parties from various countries is known as international business. Every day dramatic changes are happening in international business world. Export and import of goods and services, international investments, licencing, franchising and management contracts are some kind of international business activities. In addition, an organization that participates in cross-border transaction is become...
Words: 6730 - Pages: 27
