BLOG #11

BLOG #11

“Undoubtedly, China has grown explosively over the past two decades, capturing a huge share of world trade. But more recently, the story out of China is about a corruption-plagued communist state struggling to escape what economists sometimes call "the middle-income trap." Export-led growth has given way to an investment boom that's looking more and more like a bubble.  Though the United States still had a $295 billion trade deficit with China last year, our indebtedness to the nation declined - while U.S. productivity gains made manufacturing here more cost-competitive.” (WP, Editorial Board).

Production and its distribution is a fundamental aspect to understand modern economies, globalization and the trends of global political economy as a whole. The diversification of the means of production has expanded the market and allow the flow of goods and services to come and go to multiple destinations. An idea mentioned in the lecture and that I mentioned in my previous blog is the idea of how products and this exchange within the economy is of a global nature not just for the transaction itself but also because of the different components that were necessary to make that specific product. An example of this is illustrated in how Apple products say “made in China”, nonetheless, the process is much more “international” to use a catchy word. In other words, Apple (An American company) hires Foxconn (Taiwanese company) with factories in China and (uses Chinese workers) to make the product; in addition to the different pieces of that specific product that were needed from different countries. This has direct relation to trade and the modern connectivity of nations that we have today, not only economically but also with social and political connotations.

All of this said, it takes me to the understanding of this quote from the Washington Post Editorial Board on American politician’s historical accusation of China as taking advantage of the trade system and as a currency manipulator. More specifically, the quote mentions that even though China has in fact grown in term of its share in global trade, the underlining issue isn’t much its trade growth but how corruption makes it difficult to leave behind the “middle income gap” that is affecting so many developed nations. In relation to production and the influence of globalization we can perceive this and the distribution of such as a concurring issue within develop economies who find it hard to govern internally and at the same time maneuver the challenges of global governance.

That fragmentation involves the maintenance of these value chains that directly affect costs, investments and international cooperation. The last sentence of the quote refers to manufacturing being cost competitive in country like the United States compared to China where access to the skills necessary to assemble these products are much practical. Corporations see this as an opportunity to provide much more products but at a lower cost. The loss of jobs in the United States in the last 20 years isn’t just an effect of immigration but also of cheaper access to labor.