Can volatile economy situation shake the world factory position of China?

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Can volatile economy situation shake the world factory position of China?

 

Author: Li, Yee Lan Rachel
Title: Can volatile economy situation shake the world factory position of China?
Degree: M.Sc.
Year: 2013
Subject: Investments, Foreign -- China.
Money -- China.
Renminbi.
Labor market -- China.
Wages -- China.
Hong Kong Polytechnic University -- Dissertations
Department: School of Accounting and Finance
Pages: vi, 93 leaves : ill. (some col.) ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2637012
URI: http://theses.lib.polyu.edu.hk/handle/200/7055
Abstract: China is the paradise of low cost for foreign investors in the past decades. The abundant supply of cheap labors and competitive production cost are crucial factors for China to develop as the World Factory. This empirical paper examines the impact of wage hike and Reminbi (RMB) appreciation to foreign direct investment (FDI) and China economic growth. Solow growth model is applied to analyze the influences by an econometric regression. This paper will limit the scope to discuss the factors related to export and manufacturing sectors in China. It focuses on several essential growths economic factors that are mentioned in the neo-classical endogenous models. Following the other growth theories, it includes the additional four basic factors: physical capital, human capital, trade openness and investment freedom. I find the surging wage will reduce the total output of the foreign owned manufacturers in China. The physical capital and human capital have positive relationship with the total output, which are consistent with previous studies. Both Trade Openness and Investment Freedom boost the total FDI manufacturing output, which are consistent with our predictions. Predictably, our study shows that the low-end industries contribute less to the growth of output compared to High-end industries. Similarly, the inland and western regions contribute less to the growth of output than Coastal regions. We also suggest that the China government and Chinese manufacturers are required to allocate resources more efficiently in industrial upgrading in order to keep the sustainability and competitiveness in the future.

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