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Made in China: From World Sweatshop to a Global Manufacturing Center?

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  • Yun-Wing Sung

    (Department of Economics Chinese University of Hong Kong Shatin, Hong Kong, SAR, China)

Abstract

This paper argues that foreign investment is a second-best instrument that helps China to succeed in export-led growth by circumventing the many distortions that discriminate against domestic private enterprises. China's dependence on foreign investment for exports should decline as China builds up its market economy, but its generous preferences for foreign investors may unduly prolong its dependence. It is found that China's exports are increasingly dominated by the low value-added processing exports of foreign affiliates. In the case of Hong Kong investment in export processing on the Chinese mainland, the value-added in the Mainland is often less than that of re-exporting the output in Hong Kong. Since 2004, China has amended its treatment of foreign investments to attract higher-quality foreign investment and upgrade processing exports in order to transform itself from a world sweatshop to a global manufacturing center. The policies appear to have the intended effects. (c) 2007 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Yun-Wing Sung, 2007. "Made in China: From World Sweatshop to a Global Manufacturing Center?," Asian Economic Papers, MIT Press, vol. 6(3), pages 43-72, Fall.
    • Handle: RePEc:tpr:asiaec:v:6:y:2007:i:3:p:43-72
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    Cited by:

    1. Wu, Qiyan & Zhang, Xiaoling & Liu, Chunhui & Chen, Zhou, 2018. "The de-industrialization, re-suburbanization and health risks of brownfield land reuse: Case study of a toxic soil event in Changzhou, China," Land Use Policy, Elsevier, vol. 74(C), pages 187-194.
    2. Fischer, A.M., 2010. "Is China turning Latin?," ISS Working Papers - General Series 19431, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Chen, Xikang & Cheng, Leonard K. & Fung, K.C. & Lau, Lawrence J. & Sung, Yun-Wing & Zhu, K. & Yang, C. & Pei, J. & Duan, Y., 2012. "Domestic value added and employment generated by Chinese exports: A quantitative estimation," China Economic Review, Elsevier, vol. 23(4), pages 850-864.
    4. Prema‐chandra Athukorala, 2009. "The Rise of China and East Asian Export Performance: Is the Crowding‐Out Fear Warranted?," The World Economy, Wiley Blackwell, vol. 32(2), pages 234-266, February.
    5. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    6. Murat Arsel & Andrew M. Fischer, 2015. "Forum 2015," Development and Change, International Institute of Social Studies, vol. 46(4), pages 700-732, July.
    7. Ye Ye & Rosmini Omar & Binyao Ning & Hiram Ting, 2020. "Exploring the Interactions of Factory Workers in China: A Model Development Using the Grounded Theory Approach," Sustainability, MDPI, vol. 12(17), pages 1-21, August.
    8. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    9. Prema-chandra Athukorala & Archanun Kophaiboon, 2013. "Trade and Investment Patterns in Asia: Implications for Multilateralizing Regionalism," Departmental Working Papers 2013-16, The Australian National University, Arndt-Corden Department of Economics.
    10. Prema-chandra Athukorala, 2009. "Trends and Patterns of Foreign Direct Investments in Asia," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 3(4), pages 365-408, October.
    11. Prema-chandra Athukorala, 2008. "Trade and Investment Patterns in Asia : Regionalisation or Globalisation?," EABER Working Papers 21794, East Asian Bureau of Economic Research.
    12. repec:zbw:bofitp:2011_015 is not listed on IDEAS
    13. Taguchi, Hiroyuki, 2023. "Premature deindustrialization: an empirical analysis in latecomer developing countries," MPRA Paper 118346, University Library of Munich, Germany.
    14. Andrew Martin Fischer, 2010. "Is China turning Latin? China's balancing act between power and dependence in the lead up to global crisis," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(6), pages 739-757.
    15. Witada Anukoonwattaka, 2011. "Comparative overview of economic profiles and roles of China and India in Asian international production networks," STUDIES IN TRADE AND INVESTMENT, in: Witada Anukoonwattaka & Mia Mikic (ed.), India: A New Player in Asian Production Networks?, Studies in Trade and Investment 75, chapter 2, pages 23-53, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    16. Fan, Di & Lo, Chris K.Y. & Zhou, Yi, 2021. "Sustainability risk in supply bases: The role of complexity and coupling," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).

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