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Dell In China Essay

2859 words - 11 pages

Dell In China PAGE 1
Dell in ChinaIntroductionForeign Trade .First consider foreign trade or the flow of goods across national borders. Since 1978 China has encouraged free trade and abolished trade restrictions step by step. The government has changed its policy from the administration of foreign trade by the Ministry of Foreign Trade, to giving provincial governments much autonomy in foreign trade and to allowing private enterprises to engage in foreign trade. The total volume of foreign trade or the total volume of exports and imports increased from 20.64 billion US dollars in 1978 to 620.8 billion in 2002, accounting for 65 percent of GDP and was growing at the rate of 35 percent per year. In 2004, the trade volume reached 1.1 trillion US dollars, and had a growth rate of 30 percent. China became the third largest trading country in the world, next to the United States and Germany.Today exports from China can be found all over the world. In terms of US-China economic relations exports from China have benefited many Americans in providing them with high-quality consumer goods at low prices, but have also generated resentment and resistance by some American manufacturers and workers. Chinese exports to the US may hurt some US industries producing similar products. US workers in these industries may suffer temporarily, but in the long-run the labor market is able to adjust as new industries are developed to hire the displaced workers. In the long run, the aggregate unemployment rate (now at 5 percent) has not been visibly affected by the American imports of foreign goods. Note also that exports from China, in fact about 60 percent of them, are produced by foreign invested enterprises in China and some are American companies.Outsourcing of jobs such as having someone in Asia read X-ray or answer phones has also created resentment in the United States. From the economic point of view, outsourcing of jobs as illustrated above is the same as import of services from China. The effects are the same as for the import of goods produced in China that I just talked about. Such imports are good for China and for US although some workers may be displaced temporarily. Although this point is valid, Professor Greg Mankiw of Harvard and at the time Chairman of the President's Council of Economic Advisers got into trouble when he made this valid point in a Congressional hearing in 2004 because such a viewpoint can be unpopular for American workers and politicians.As an importer China provides a large market for foreign manufacturers and has gained economic power as a result. Demand for imports to China propels economic growth of other countries in the world. China first took a mercantilist stand in the restriction of imports, but after the rapid expansion of Chinese exports, the table has turned as some developed countries including the US are considering the imposition of restrictions on imports from China. The imposition of quotas on textiles from China is...

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