Wednesday, January 25, 2006

Chinese Export Trade
Dani Rodrik
Harvard University
Revised, January 2006

The Paper basically expresses this Author's own views on Chinese Export success, though there is some lack of clarity in definition of the factors. China combines a controlable Labor force with appropriate intelligent Economic policy. Chinese Labor must adhere to their Employers, as they exist in an undeveloped economic market where they cannot obtain alternate employment at Payscales equal to their Export employment. Employers utilize the differential between native Payscales and Importing Countries to set Employee Payscales above native Payscales, but far lower than the Payscales of Importing Countries. The Chinese Government and Employers therefore enjoy higher Profits alongside a loyal Labor force, while the Chinese Government allows Employers a higher share of the Profits than other Competitors--such as India and Banglodash. This incites heavier than normal foreign investment in China.

The matrix grants foreign investors the capacity and Profitability to provide the higher Training Costs of their Employees, while insuring those Employees do not have the opprotunity to sell that training elsewhere. The Chinese Government has already shown the willingness to control the private Employees of foreign investors--forestalling regional or national immigration, or competitive development in singular regions. The Chinese Government also limits the investment mix so the vast majority of Chinese Wages are deposited in a Government-owned and operated Banking system. The facilitates a high Taxation of Chinese Wages and Products to the native Consumers. This Two-Tier system has deep roots in Chinese society, going back to the Tax and Trading policies of the Chinese empires. lgl

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