Abstract
The fast expansion of China's economy and the following liberalization of its commerce have had far-reaching consequences for the world's LICs. Focusing on the implications on labor markets and income distribution, this research analyzes how China's trade liberalization has affected salaries in LICs. This research intends to provide light on how China's trade policies have affected wage dynamics and societal shifts by reviewing the relevant literature.
China's exports have increased as the country has liberalized its trade policies and opened up to international markets. Wages in LICs have been affected, both positively and negatively, by the flood of Chinese imports. Wages in businesses that rely heavily on human labor have been hit especially hard by cheap Chinese imports. Because of this, low-skilled employees in LICs face more competition and less bargaining leverage, both of which contribute to wage stagnation or decline.
The rise of China's exports, however, has opened up new doorways for economic development and increased employment in LICs. Increased demand from China has fueled employment growth and pay inflation in LICs' comparative advantage sectors including natural resources and specialized manufacturing. Chinese investment in low- and middle-income countries (LICs) has boosted local economies by creating jobs and raising salaries in the manufacturing and infrastructure sectors.
The overall effect of China's trade liberalization on LICs' salaries is nuanced and sector-specific. Economic diversification, trade patterns, and the structure of LIC economies all have a role in shaping the size and direction of these impacts
References
- Topuz SG, Dağdemir Ö. Analysis of the relationship between trade openness, structural change, and income inequality under Kuznets curve hypothesis: The case of Turkey. The Journal of International Trade & Economic Development. 2020 Aug 17;29(6):647-64. https://doi.org/10.1080/09638199.2019.1711146
- Wang Q, Wang L, Li R. Trade protectionism jeopardizes carbon neutrality–decoupling and breakpoints roles of trade openness. Sustainable Production and Consumption. 2023 Jan 1;35:201-15. https://doi.org/10.1016/j.spc.2022.08.034
- Zhao H. China–Japan compete for infrastructure investment in Southeast Asia: geopolitical rivalry or healthy competition? Journal of Contemporary China. 2019 Jul 4;28(118):558-74. https://doi.org/10.1080/10670564.2018.1557946
- An H, Razzaq A, Nawaz A, Noman SM, Khan SA. Nexus between green logistic operations and triple bottom line: evidence from infrastructure-led Chinese outward foreign direct investment in Belt and Road host countries. Environmental Science and Pollution Research. 2021 Oct;28(37):51022-45. https://doi.org/10.1007/s11356-021-12470-3
- Fatima S, Chen B, Ramzan M, Abbas Q. The nexus between trade openness and GDP growth: Analyzing the role of human capital accumulation. Sage Open. 2020 Nov;10(4):2158244020967377. https://doi.org/10.1177/2158244020967377
- Saucedo E, Ozuna Jr T, Zamora H. The effect of FDI on low and high-skilled employment and wages in Mexico: a study for the manufacture and service sectors. Journal for Labour Market Research. 2020 Dec;54(1):9. https://doi.org/10.1186/s12651-020-00273-x
- Wangwe S, Simonetti R, Tibandebage P, Mackintosh M, Israel C, Mujinja PG. Upgrading under globalization in health-related industries in Tanzania: the case for dynamic industrial deepening. Innovation and Development. 2022 Sep 2;12(3):479-96. https://doi.org/10.1080/2157930x.2021.1886415
- Jiang Z, Miao C, Arreola Hernandez J, Yoon SM. Effect of Increasing Import Competition from China on the Local Labor Market: Evidence from Sweden. Sustainability. 2022 Feb 24;14(5):2631. https://doi.org/10.3390/su14052631
- Choi J, Xu M. The labor market effects of the China Syndrome: Evidence from South Korean manufacturing. The World Economy. 2020 Nov;43(11):3039-87. https://doi.org/10.1111/twec.12893
- Sobočan AM, Bertotti T, Strom-Gottfried K. Ethical considerations in social work research. European Journal of Social Work. 2019 Sep 3;22(5):805-18. https://doi.org/10.1080/13691457.2018.1544117
- Aliukonis V, Poškutė M, Gefenas E. Perish or publish dilemma: challenges to responsible authorship. Medicina. 2020 Mar 12;56(3):123. https://doi.org/10.3390/medicina56030123
- Shatakishvili D. Who Benefits From the Challenges of the Chinese Economy and the Role of Georgia? China-USA Business Review. 2021 May;20(3):126-37. https://doi.org/10.17265/1537-1514/2021.03.002
- Li J, Shan Y, Tian G, Hao X. Labor cost, government intervention, and corporate innovation: Evidence from China. Journal of Corporate Finance. 2020 Oct 1;64:101668. https://doi.org/10.1016/j.jcorpfin.2020.101668
- Wu J, Wei YD, Chen W, Yuan F. Environmental regulations and redistribution of polluting industries in transitional China: Understanding regional and industrial differences. Journal of Cleaner Production. 2019 Jan 1;206:142-55. https://doi.org/10.1016/j.jclepro.2018.09.042
- Rozelle S, Xia Y, Friesen D, Vanderjack B, Cohen N. Moving beyond Lewis: Employment and wage trends in China’s high-and low-skilled industries and the emergence of an era of polarization: Presidential address for the 2020 Association for comparative economic studies meetings. Comparative Economic Studies. 2020 Dec;62(4):555-89. https://doi.org/10.1057/s41294-020-00137-w
- Awais M, Samin T, Gulzar MA, Hwang J. The sustainable development of the China Pakistan economic corridor: synergy among economic, social, and environmental sustainability. Sustainability. 2019 Dec 9;11(24):7044. https://doi.org/10.3390/su11247044
