Distribution System of China's Industrial Clusters: Case Study of Yiwu China Commodity City

This paper discusses the issue of upgrading industrial clusters from the perspective of external linkages. It is taken for granted that in most developing countries, due to the limited domestic market and poor traditional commercial networks, industrial clusters are able to upgrade only when they are involved in global value chains. However, the rise of China’s industrial clusters challenges this view. Historically, China has had a lot of industrial clusters with their own traditional commercial networks. This fact combined with its huge population resulted in the formation of a unique external linage to China’s industrial clusters after the socialist planning period ended. In concrete terms, since the 1980s, a traditional commercial institution . the transaction market . began to appear in most clusters. These markets within the clusters get connected to those in the cities due to interaction between traditional merchants and local governments. This has resulted in the formation of a powerful market network-based distribution system which has played a crucial role for China’s industrial clusters in responding to exploding domestic demand. This paper explains these features in detail, using Yiwu China Commodity City as a case study.

Growth of the Firm and Economic Backwardness: A Case Study and Analysis of China's Mobile Handset Industry

Economic backwardness often influences the growth of firms in developing countries. In this paper, we investigate the growth conditions and paths available for latecomers competing with first movers. Employing the concepts of boundaries of the firm and the disadvantage of backwardness, we present a case study of China's mobile handset industry and proceed to develop a simple model. We find that although significant disadvantage does not allow latecomers to grow, there are possibilities for changing the conditions of growth if latecomers can utilize outside resources and/or indigenous advantages.

The Technology Gap and the Growth of the Firm: A Case Study of China's Mobile-phone Handset Industry

We have examined the way in which local Chinese firms confronted with a technology gap have achieved growth, using the Chinese handset industry as a case study. Chinese local firms have lacked technology, and have therefore turned to outside firms for development, design, and manufacturing, while they themselves have focused on sales and marketing, using their advantage of familiarity with the Chinese market. Consequently, by establishing a growth condition in which their selection of boundaries counterbalances the technology gap they have been able to expand their market share in comparison with foreign firms.

Skill distribution and comparative advantage: a comparison of China and India

This paper empirically examines the different comparative advantages of two emerging economic giants, China and India, in relation to the different skill distribution patterns in each country. By utilizing industry export data on China and India from 1983 to 2000, we find that a country with a greater dispersion of skills (i.e., India, especially in the earlier years) has higher exports in industries with shorter production chains, whereas a country with a more equal dispersion of skills (i.e., China, especially in the later years) is found to have higher exports in industries with longer production chains. The causal relationship is fairly robust across different specifications. This empirical evidence supports our assumption that the likely mechanism for these results is the negative impact of low-skilled workers on input quality, which accumulates and becomes larger as the length of production chains and the proportion of low-skilled workers in the economy increase.

Exploring the sources of China's challenge to Japan : models of industrial organisation in the motorcycle industry

In view of the recent rise of China, this paper looks into one of the most important yet relatively overlooked ingredients of the Chinese success: industrial organisation. It will examine the case of the motorcycle industry, in which the rise of Chinese manufacturers even disrupted the established dominance of Japanese industry leaders. Adopting the modified version of the global value chain governance framework, this paper shows that the rise of China has been driven by a distinctive arm’s-length model of industrial organisation, which is in sharp contrast to the conventional captive model that has sustained the Japanese leadership.

The voices and protests of China's labour NGOs and their effort to promote migrant worker rights

Labour NGOs in China are relatively new organizations that emerged in the 1990s and have spread during the 2000s. Migrant workers in China are weak both socially and economically and have been lacking ways of voicing grievances and protesting. Grassroots labour NGOs for migrant workers seem to be an efficient channel for their voices. This paper examines how labour NGOs emerged and how they function in the context of current Chinese society. This paper adopts the case study method to describe three NGOs in Beijing and Shenzhen. The paper shows that these NGOs are using different methods to resolve migrant worker problems. At the same time, they are voicing the migrants' grievances and protesting in their own ways.

The Evolution of the "One China" Concept in the Process of Taiwan's Democratization

This paper investigates how Taiwan's "one China" concept evolved during the democratization process that occurred under the leadership of former President Lee Teng-hui. The author argues that there was a crucial evolution of the "one China" concept and that the transformation of the concept resulted from changes in Taiwan's internal political circumstances. The evolution of the concept creates a real possibility that the "status quo" sought by the ROC in the Taiwan Strait both during and after the Cold War might be destroyed. In addition, any further evolution of the "one China" concept will surely make the "status quo" of Taiwan untenable, in that it would induce Taiwan to seek de jure instead of de facto independence, possibly initiating a conflict between the PRC and the ROC. To prevent such a conflict in the Taiwan Strait, the international community must persuade the ROC not to go beyond the "status quo" and to stay within the framework of de facto independence. At the same time, both the PRC and the ROC should be urged to maintain an open conduit of communication for productive talks on the reunification of China.

Local Firms in Latecomer Developing Countries amidst China's Rise -The case of Vietnam's motorcycle industry-

This paper examines the impact of China's recent rise on the development of local firms in latecomer developing countries. Based on a detailed analysis of Vietnam's motorcycle industry, the paper argues that China's impact may go beyond what a trade analysis suggests. Indeed, China's rise induced a dynamic transformation in the structure of value chains within Vietnam's motorcycle industry, bringing about far-reaching consequences on the development and upgrading trajectories of local firms. The implications of the case study for the wider "global value chain" approach is also discussed.

Application of the Input-Output Decomposition Technique to China's Regional Economies

Structural decomposition techniques based on input-output table have become a widely used tool for analyzing long term economic growth. However, due to limitations of data, such techniques have never been applied to China's regional economies. Fortunately, in 2003, China's Interregional Input-Output Table for 1987 and Multi-regional Input-Output Table for 1997 were published, making decomposition analysis of China's regional economies possible. This paper first estimates the interregional input-output table in constant price by using an alternative approach: the Grid-Search method, and then applies the standard input-output decomposition technique to China's regional economies for 1987-97. Based on the decomposition results, the contributions to output growth of different factors are summarized at the regional and industrial level. Furthermore, interdependence between China's regional economies is measured and explained by aggregating the decomposition factors into the intraregional multiplier-related effect, the feedback-related effect, and the spillover-related effect. Finally, the performance of China's industrial and regional development policies implemented in the 1990s is briefly discussed based on the analytical results of the paper.

A Divergent Path of Industrial Upgrading: Emergence and Evolution of the Mobile Handset Industry in China

Starting from almost null in the late 1990s, China's mobile phone handset industry has grown to account for more than 40 percent of the current world production. While export growth has been overwhelmingly led by multi-national corporations (MNCs), increasingly fierce competition in the domestic market ignited by the advent of local handset makers has induced unique industrial evolution: (1) outgrowth of independent design houses specialized in handset development and (2) emergence of IC fabless ventures that design core ICs for handsets. In the background of this evolutionary industrial growth there are factors such as, the scale and increasing diversity of China's domestic market that advantages local firms vis-a-vis MNCs; modularization of handset and semiconductor technologies; policy interventions that supports local startups. The emergence and evolution of China's handset industry is likely to have international implications as the growth of the global demand for low-cost and multi-function mobile phone handsets is expected to accelerate. Thus, our case suggests that the conventional view of latecomer industrialization and upgrading that emphasizes the key role of international production networks organized by MNCs needs to be modified in order to accommodate China's rise into perspective.

China's Impact on the Exports of Other Asian Countries: A Note

Despite widespread interest in China's growing trade surplus and its impact on other countries, empirical research in these issues is handicapped by the lack of reliable statistics on aggregate import and export prices. Although researchers estimate the trade volumes of China and other East Asian countries using a variety of surrogate price indices, an inappropriate deflator can give rise to a significant bias in econometric analysis. This paper discusses the potential seriousness of this problem by examining recent studies on the export competition between China and other Asian countries.

Separation of Control and Cash-Flow Rights of State Owned Listed Enterprises: Channels of Expropriation after the Discriminated Share Reform in China

Literature on agency problems arising between controlling and minority owners claim that separation of cash flow and control rights allows controllers to expropriate listed firms, and further that separation emerges when dual class shares or pyramiding corporate structures exist. Dual class share and pyramiding coexisted in listed companies of China until discriminated share reform was implemented in 2005. This paper presents a model of controller to expropriate behavior as well as empirical tests of expropriation via particular accounting items and pyramiding generated expropriation. Results show that expropriation is apparent for state controlled listed companies. While reforms have weakened the power to expropriate, separation remains and still generates expropriation. Size of expropriation is estimated to be 7 to 8 per cent of total asset at mean. If the "one share, one vote" principle were to be realized, asset inflation could be reduced by 13 percent.

Trade of Heilongjiang Province (China) with Russia

Local trade between the Far East region of the USSR and the Northeast region of the People’s Republic of China started in 1957, arranged by the public trade organizations in the respective borderlands. Heilongjiang Province of China has been the main actor in trade with the Far East region of the USSR, and more recently, Russia. After 1957, Heilongjiang Province’s trade with the Russian Far East developed rapidly until 1993, except a period of interruption (1967-1982). Thereafter, the Heilongjiang Province’s trade with the Russian Far East underwent a stagnation period (1994-1998), a recovery period (1999-2001), a rapid development period (2002-2007) and a period of change of tendencies and radical decrease (2008-2009). Heilongjiang Province’s trade with the Russian Far East consists of three main forms: general trade, Chinese-style border trade (Bianjing Trade which includes Bianjing Small Trade and trade between private persons (Hushi Trade)) and Travel Trade. The rapid increase of Heilongjiang Province’s trade with the Russian Far East from 2002 to 2007 is mainly attributable to the increase in the export of ordinary consumer goods, especially textile clothing and footwear, and to Bianjing Small Trade.

Value added trade and structure of high-technology exports in China

This study focuses on the technological intensity of China's exports. It first introduces the method of decomposing gross exports by using the Asian international input–output tables. The empirical results indicate that the technological intensity of Chinese exports has been significantly overestimated due to its high dependency on import content, especially in high-technology exports, an area highly dominated by the electronic and electrical equipment sector. Furthermore, a significant portion of value added embodied in China's high-technology exports comes from services and high-technology manufacturers in neighboring economies, such as Japan, South Korea, and Taiwan.

Dynamics of investment negotiations between China and Japan : the China-Japan-Korea trilateral investment treaty and beyond

The investment agreement relationship between China and Japan is complex. The many intersecting and overlapping agreements can rightly be described as a "noodle bowl of agreements." The 1989 bilateral investment treaty (BIT) between China and Japan still stands. Japan can also free-ride on the negotiation outcome of China's BITs and free trade agreements (FTAs) with other countries by using the most-favored-nation (MFN) provision in the 1989 China-Japan BIT, which does not contain regional economic integration organization (REIO) exception rules. However, because the China-Japan BIT does not have investor-state dispute settlement (ISDS), it may face implementation problems. The China-Japan-Korea trilateral investment treaty (CJK TIT), in force since 2014, made improvements upon the 1989 BIT, but Japan is not entirely satisfied with the outcome. For Japan, pre-establishment national treatment (NT) and prohibition of various types of performance requirements are the most important negotiation items, but the CJK TIT insufficiently addressed those problems. Moreover, because the CJK TIT has MFN provisions with an REIO exception rule, better access to investment markets brought about by future FTAs such as the China-Korea FTA and the EU-China FTA cannot be imported into CJK TIT. Hence, in the long run, Japan needs to pursue an FTA investment chapter with China that covers both MFN and ISDS.