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Andika Pradipta Putra 29117168


Dhanu Koentoro Djati 29117180
Harris Kristanto Yondi 29117181
Khairunnisa Rizkianti 29117234
Magnalia Felly Annisa 29117248

China and Its Neighbors


China’s Economic Development

1949 - 1970: 1970s: Deng 2000s: The


China’s Xiaoping’s People’s
economic economic Republic of
reformation. China’s GDP
remained Agricultural de- keeps
isolated from collectivization increasing
the founding Autonomy in ever since
of its nation production for economic
state-owned reform. It’s
enterprises predicted to be
Developing the 2nd
special strongest
economic nation in the
zones world by 2022.
China and International Trade

Aspects 1980 2003 Position


(in USD) (in USD)
Exports 1.43 Billion 439 Billion World’s Top 4th
Imports 1.48 Billion 413 Billion World’s Top 3rd

☉ International trade is one of the factors that strongly help China’s economy
after the reformation.
☉ From 1978-2003, China's trade grew nearly five times faster than world trade.
☉ China had run a trade deficit for much of the 1980s even as imports of materials
and capital equipment for local and foreign-funded factories helped to build up its
industrial base, the deficits turned to surpluses in the 1990s
☉ Deficit that happened in China was caused by imports to start massive production
especially in textile industry, clothes, and foot wears (which then beaten by
machine and electronic production), which turned into surpluses for China.
☉ China then loosen its policies about export and import such as tariff, licenses, and
quota to facilitate and increase international trade activities.
☉ In 2004, China’s top trading partners were the US, Japan, Hong Kong, South
Korea, Taiwan, Germany, Singapore, Malaysia, the Netherlands, and Russia.
China and International Investment

☉ China’s vast economic growth was also encouraged by the


huge amount of Foreign Domestic Investment (FDI). Cheap and
competent labor cost interests a lot of countries to move its
production to China, especially neighboring countries. This huge
investment helped China to expand its production scale and
scope, until it becomes very good at producing goods with
varieties cost and quality.
☉ Due to competent and cheap labor cost, huge investment, and massive
amount of exports worldwide, China became one of the most
economically competitive country in the world.
☉ In the 1990s, Chinese production had transitioned from relatively low-
priced, low quality products to compete in virtually all segments and price
points. The end of the quota regime in 2005 was expected to lead to a
dramatic improvement in China's global position
☉ China dominates export of garment, and potentially beat India, Sri Lanka,
Bangladesh, Thailand, and even can dominates US market, so China can
restraint the speed of the US garment export.
☉ In the field of electronic goods production, countries such as Japan, and
South Korea also send main components of their products to China to
be assembled and finished there until they’re ready to sell.
☉ China changes other countries’ habit of buying furniture at the nearest
place from house, to importing China’s furniture.
☉ China has been trusted to manufacture vehicles, however China is still
quite weak when it comes to natural resources based industry, and
highly engineered, or advanced industries such as pharmaceuticals and
aerospace industry. China also was considered to lag well behind in
advanced services like financial services, consulting, accounting and
other professional services.
The Impact of China’s Economic Growth on
Its Neighboring Countries

☉ The growth of China can either give harm or benefit to its neighboring countries.
☉ Countries that have similar competitive advantages with China are going to have
disadvantages due to this phenomenon, since they have to compete against China
and will possibly lose their incomes and investments.
☉ Countries that are able to utilize their advantages and exploit China’s
disadvantages will eventually gain benefits. For example, the countries that own
resources that necessarily needed by China to grow, such as oil and gas, and
professional services.
☉ Neighboring countries that rely on technological advancement need to be aware of
China due to its ability to reproduce technological products and sell it with cheaper
price.
Question:
Is China a Friend or Foe?
Answer to the Question

☉ The answer to the question could be vary, it depends on from which


perspective that we are going to look at as Indonesian citizen.
☉ If we look from the perspective of economic competition, where
Indonesia provides labors, then China is obviously going to be our
biggest foe. Considering that Indonesian labors frequently complain
about the increase of wages, along with lesser skills, then it is tough for
us to compete against China’s labors.
☉ Considering that factor, we need to change what we internationally trade
in order for us to able to compete and befriend with China.
☉ To be able to beat China, we need to exploit disadvantages that China
owns, by trying to understand or strongest Production Possibility Factory
(PPF), and look for Terms of Trade (ToT) of our sectors that are
stronger than China, and use it as Revealed Comparative Advantage
(RCA).
☉ For example, our natural resources based production has better
Inherent Comparative Advantage than China. However, we need to be
able to process our own natural resources, in order for us to be able to
produce different products which can lead to Indonesian’s comparative
advantage compared to China in the international trade.
Maps

People’s
Republic of
China
Thank You