Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Production subsidies — the secret to China’s success?

20.03.2008
The secret of China’s exporting success may lie in unfair production subsidies, according to new research presented at the Royal Economics Society annual conference by a team from The University of Nottingham’s Globalisation and Economic Policy Centre (GEP).

The economists behind the research say it raises serious questions about whether China is being fair with its trading partners.

The GEP research, based on data from nearly half a million firms over a six-year period from 1999 to 2005, including analysis of rare production subsidy data, shows a clear link between Chinese government subsidies and increases in firm exports.

China’s growing participation in international trade has been one of the most prominent features of its economic reform. It is the world’s third-largest exporter, and the fastest growing exporter among members of the World Trade Organisation (WTO), which it joined in December 2001.

GEP’s Dr Yundan Gong, one of the paper’s co-authors, said: “During negotiations to secure this WTO membership the Chinese government made an important commitment to eliminate subsidies, which are seen as unfair by the international community. Economists are sceptical about how committed China has been to doing this. Our research shows that, even as late as 2005 these subsidies were still very high, and have had a significant impact in supporting the country’s exporting activities.”

According to the GEP team, in 2005 China gave $US 2.3bn in subsidies to State Owned Enterprises (SOEs) and between 1995 and 2005 general subsidies amounting to a total of $US 310bn were given to firms.

Exporting has been a key driver in China’s economic success and maintaining exports is seen as key to China’s continued economic growth — other research cited in this paper shows that a 10 per cent growth in exports leads to a one per cent growth in GDP in China.

Success is not just confined to labour-intensive manufacturing in which China might be expected to have a natural comparative advantage. China has seen a recent shift in the nature of its exports towards more sophisticated products. The total export value of electrical machinery and high-tech products, including products such as computers, electronics, aerospace technology and telecom equipment has risen from $US 640bn in 2005 to $US 1048bn in 2007. Exports of labour-intensive products like toys and plastics have shown modest or even negative growth.

Over the same period there has been a shift in the nature of production subsidies — in 1999 they were highest in the textiles and ordinary machinery sectors. By 2005 firms in the instruments and meters industry received by far the highest levels of subsidies. Econometric modelling of the data shows that doubling production subsidies leads, on average, to a 2.1 per cent increase in the level of exports.

Dr Gong said: “The research supports those economists who have argued that subsidies have helped drive China’s export success, which has been at the heart of its recent economic boom. This raises serious questions about whether China needs to further adapt its trade practices and reduce such subsidies to fully comply with its WTO committals.”

Emma Thorne | alfa
Further information:
http://www.nottingham.ac.uk

More articles from Business and Finance:

nachricht How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

nachricht Demographic change depresses tax revenues
04.11.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Designing Architecture with Solar Building Envelopes

Among the general public, solar thermal energy is currently associated with dark blue, rectangular collectors on building roofs. Technologies are needed for aesthetically high quality architecture which offer the architect more room for manoeuvre when it comes to low- and plus-energy buildings. With the “ArKol” project, researchers at Fraunhofer ISE together with partners are currently developing two façade collectors for solar thermal energy generation, which permit a high degree of design flexibility: a strip collector for opaque façade sections and a solar thermal blind for transparent sections. The current state of the two developments will be presented at the BAU 2017 trade fair.

As part of the “ArKol – development of architecturally highly integrated façade collectors with heat pipes” project, Fraunhofer ISE together with its partners...

Im Focus: How to inflate a hardened concrete shell with a weight of 80 t

At TU Wien, an alternative for resource intensive formwork for the construction of concrete domes was developed. It is now used in a test dome for the Austrian Federal Railways Infrastructure (ÖBB Infrastruktur).

Concrete shells are efficient structures, but not very resource efficient. The formwork for the construction of concrete domes alone requires a high amount of...

Im Focus: Bacterial Pac Man molecule snaps at sugar

Many pathogens use certain sugar compounds from their host to help conceal themselves against the immune system. Scientists at the University of Bonn have now, in cooperation with researchers at the University of York in the United Kingdom, analyzed the dynamics of a bacterial molecule that is involved in this process. They demonstrate that the protein grabs onto the sugar molecule with a Pac Man-like chewing motion and holds it until it can be used. Their results could help design therapeutics that could make the protein poorer at grabbing and holding and hence compromise the pathogen in the host. The study has now been published in “Biophysical Journal”.

The cells of the mouth, nose and intestinal mucosa produce large quantities of a chemical called sialic acid. Many bacteria possess a special transport system...

Im Focus: Newly proposed reference datasets improve weather satellite data quality

UMD, NOAA collaboration demonstrates suitability of in-orbit datasets for weather satellite calibration

"Traffic and weather, together on the hour!" blasts your local radio station, while your smartphone knows the weather halfway across the world. A network of...

Im Focus: Repairing defects in fiber-reinforced plastics more efficiently

Fiber-reinforced plastics (FRP) are frequently used in the aeronautic and automobile industry. However, the repair of workpieces made of these composite materials is often less profitable than exchanging the part. In order to increase the lifetime of FRP parts and to make them more eco-efficient, the Laser Zentrum Hannover e.V. (LZH) and the Apodius GmbH want to combine a new measuring device for fiber layer orientation with an innovative laser-based repair process.

Defects in FRP pieces may be production or operation-related. Whether or not repair is cost-effective depends on the geometry of the defective area, the tools...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

12V, 48V, high-voltage – trends in E/E automotive architecture

10.01.2017 | Event News

2nd Conference on Non-Textual Information on 10 and 11 May 2017 in Hannover

09.01.2017 | Event News

Nothing will happen without batteries making it happen!

05.01.2017 | Event News

 
Latest News

Solar Collectors from Ultra-High Performance Concrete Combine Energy Efficiency and Aesthetics

16.01.2017 | Trade Fair News

3D scans for the automotive industry

16.01.2017 | Automotive Engineering

Nanoparticle Exposure Can Awaken Dormant Viruses in the Lungs

16.01.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>