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Chinas Economic Growth - Essay Example

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Chinas Economic Growth

The EU has progressively liberalized textile and clothing imports under quotas to a present level of only 25% of total imports.(Heagreaves,2004)(Smook, 2005) Though the barriers to the entry into the EU market has increased considerably in terms of quality, innovation, lead-time and design, the benefits of 'Chinese imports without quota' remains attractive. If the top importers of textile apparel into the whole world EU is assessed, China ranks in the first place, but only accounts for 19.9% of the market. The growth of China with increased penetration of EU will possibly assist in sustaining competitiveness in China, which will make it less reliant on US market. (Smook, 2005)
The globalization, of China, in the phasing-out quota, will produce new challenges in the competitiveness, since quotas imposed were generally based on historical exports to those countries and bilateral relationships. Countries for which quotas provided a shield against their low competitive ability will lose out, and countries like China can only go forward through greater competitiveness. China joined the WTO late, at a stage when the 10- year quota phase-out (MFA) was already in progress and as a result, a number of textile and apparel items were quota free overnight. And simultaneously, with joining the WTO, the Chinese Government was actively engaged in new political and economic reform. Large investment in the manufacturing industry increased exports, and the start of the phasing-out of State Owned Enterprises (SOE's) increased unemployment. This resulted in the increase in production and exports. Overall Chinese textile and apparel imports to the US alone grew by 117% in 2002, and another 75% by August 2003 in some quota categories (Heagreaves, 2004) (Smook, 2005)
The massive and growing population of China provides for low cost of labour which can be a great advantage in achieving low cost production. The government support and quota privilege, adds to the economic advantage. The low cost of raw materials and low cost labour, when pushed to attain quality output and timely delivery can be a very promising position to attain a position in the world market, including EU. China with these comparative advantages has achieved the level of economic transition, , with very promising projection of substantial growth by 2020, if it could resolve some hard issues like Factor Price reform, Ownership reform of SOE's, Government reform (fiscal and monetary), Unemployment, surplus labour, Rural-urban migration and rural-urban income divide, Lack of safety net, health, pensions, housing etc., Incomplete legal system, Large amounts of non-performing loans (NPLs) and credit constraints for SMEs, Environmental degradation and AIDS incidence and challenge of containing SARS it affects productive capacity and export markets. (Smook, 2005)
The textile industry is merged with the Chinese economy and population, so closely it almost forms the spine of economic development. The estimates of the number of factories in China range just as widely as employment estimates. There are more than 100,000 factories engaged in some aspect of textile production, with much growth in the recent years attributed to garment sewing. And, China maintains her position as the larges textile manufacturing nation in the world, with fair share of control over EU market. It has been said that "there are more sewing machines in ...Show more

Summary

Summary: The entry of China in EU market, is more challenging in terms of monopoly, the most critical sector are those associated with the access of the market. The adoption of the countervailing measures by importing countries to stem the flow of the imports from China is a real possibility…
Author : czemlak
Chinas Economic Growth essay example
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