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5 White Paper on the Business Environment in China
2.7 Manufactured Articles
MANUFACTURED ARTICLES HAVE, by all report called the yuan “signi cantly undervalued.” 3
accounts, played a major role in China’s rise to the China’s manufacturing sector has also played a large role in
status of economic superpower. Beginning in the early 1980s,
China’s manufacture of goods, ranging from textiles, footwear providing jobs for an estimated 27.2 percent of the employed
and simple consumer goods to the more recent televisions, population (some 211 million individuals) as of 2008.4
medical equipment and appliances, accounted for $916
billion in revenue in 2006—fully 95 percent of the total value Now, due to rising costs in the more developed coastal
of exports.1 regions, manufacturers that remain in the PRC are moving
inland to more rural areas—as a result, we may see a second
According to one London-based analyst’s op-ed in China period of signi cant development as the nation’s undeveloped
Daily: inland becomes more industrialized.5
ere are three secrets to China’s export success. In February 2010, China Daily reported that secondary
First, by engaging in regional production chains, industry as a whole accounted for 46.8 percent of China’s
Chinese enterprises have been able step by step to 2009 “general domestic income” (likely meaning gross
absorb advanced technology and upgrade their skills. domestic income, or GDI),6 and contributed 49.3 percent to
According to the World Bank, more than a quarter of the nation’s annual economic growth in 2010.
China’s manufactured exports are hi-tech, one of the
highest proportions in the world. As a result, workers According to the National Bureau of Statistics, in 2010 the
these days are far more productive than they were a PRC’s “manufactured goods accounted for 19.8 percent of the
few years ago, with their increased output helping world’s total in 2010, which allowed the country to overtake
make up for the higher wages they are paid. the United States to become the world’s top manufacturer in
terms of output.”7
Second, the sheer size of China’s manufacturing
workforce plus a focus on investment in factories and In January 2011 the Ministry of Industry and Information
the infrastructure that surrounds them allows Chinese Technology predicted slowdown in the growth of the nation’s
enterprises to respond quickly to shifts in demand and industrial output within that year due to “the risk of falling
ship their goods to market faster and at lower cost exports as pressure for the yuan’s appreciation grew and
than their overseas rivals. global demand growth remained weak, as well as in ation,
the nancial problems of small and medium-sized enterprises
ird, many enterprises bene t from generous (SMEs), and environmental restrictions.”8
government support in the form of cheap loans and
a supportive currency policy. Opinion is now divided Having been a major engine for growth during the past
on whether the renminbi is close to “fair value”. But twenty years of economic prosperity, the manufacture of
exporters in China have the luxury of knowing that goods also saw some of the most prominent negative e ects
the People’s Bank of China will intervene if needed to from the economic slowdown that became apparent in
prevent a sharp appreciation in the Chinese currency.2 2008: according to the Guangdong Provincial Department
of Foreign Trade and Economic Cooperation, more than
e issue of the yuan’s value has been a persistent one; in 1,300 companies closed, suspended operations or relocated
the recent U.S. Presidential Election, Republican candidate out of the Pearl River Delta between January and September
Romney vowed to label the PRC a “currency manipulator” on 2008. is gure is particularly relevant due to Guangdong
his rst day in o ce, thus triggering trade sanctions against and the Pearl River Delta’s status as one of the most heavily-
Chinese exports. Following the re-election of President Obama, invested areas in light industrial manufacturing, as well as
the U.S. Department of the Treasury—which department is being one of the most a uent. It was additionally reported
actually responsible for making the determination of currency that approximately 30 percent of foreign-invested enterprises
manipulation, not the President’s o ce—reported that the in Guangdong reported losses in that period.9
PRC’s control of the yuan did not meet the legal requirements
for it to be labeled a currency manipulator, although the same With signs of the global economic slowdown turning
more apparent, the Central Government became extremely
188 proactive at attempting to cushion companies from the
ill-e ects of the global issues, including the 4 trillion yuan
stimulus package, which included adjustments to VAT,
consumption and business tax regulations.10
Furthermore, the promising notion of increased domestic
2.7 Manufactured Articles
MANUFACTURED ARTICLES HAVE, by all report called the yuan “signi cantly undervalued.” 3
accounts, played a major role in China’s rise to the China’s manufacturing sector has also played a large role in
status of economic superpower. Beginning in the early 1980s,
China’s manufacture of goods, ranging from textiles, footwear providing jobs for an estimated 27.2 percent of the employed
and simple consumer goods to the more recent televisions, population (some 211 million individuals) as of 2008.4
medical equipment and appliances, accounted for $916
billion in revenue in 2006—fully 95 percent of the total value Now, due to rising costs in the more developed coastal
of exports.1 regions, manufacturers that remain in the PRC are moving
inland to more rural areas—as a result, we may see a second
According to one London-based analyst’s op-ed in China period of signi cant development as the nation’s undeveloped
Daily: inland becomes more industrialized.5
ere are three secrets to China’s export success. In February 2010, China Daily reported that secondary
First, by engaging in regional production chains, industry as a whole accounted for 46.8 percent of China’s
Chinese enterprises have been able step by step to 2009 “general domestic income” (likely meaning gross
absorb advanced technology and upgrade their skills. domestic income, or GDI),6 and contributed 49.3 percent to
According to the World Bank, more than a quarter of the nation’s annual economic growth in 2010.
China’s manufactured exports are hi-tech, one of the
highest proportions in the world. As a result, workers According to the National Bureau of Statistics, in 2010 the
these days are far more productive than they were a PRC’s “manufactured goods accounted for 19.8 percent of the
few years ago, with their increased output helping world’s total in 2010, which allowed the country to overtake
make up for the higher wages they are paid. the United States to become the world’s top manufacturer in
terms of output.”7
Second, the sheer size of China’s manufacturing
workforce plus a focus on investment in factories and In January 2011 the Ministry of Industry and Information
the infrastructure that surrounds them allows Chinese Technology predicted slowdown in the growth of the nation’s
enterprises to respond quickly to shifts in demand and industrial output within that year due to “the risk of falling
ship their goods to market faster and at lower cost exports as pressure for the yuan’s appreciation grew and
than their overseas rivals. global demand growth remained weak, as well as in ation,
the nancial problems of small and medium-sized enterprises
ird, many enterprises bene t from generous (SMEs), and environmental restrictions.”8
government support in the form of cheap loans and
a supportive currency policy. Opinion is now divided Having been a major engine for growth during the past
on whether the renminbi is close to “fair value”. But twenty years of economic prosperity, the manufacture of
exporters in China have the luxury of knowing that goods also saw some of the most prominent negative e ects
the People’s Bank of China will intervene if needed to from the economic slowdown that became apparent in
prevent a sharp appreciation in the Chinese currency.2 2008: according to the Guangdong Provincial Department
of Foreign Trade and Economic Cooperation, more than
e issue of the yuan’s value has been a persistent one; in 1,300 companies closed, suspended operations or relocated
the recent U.S. Presidential Election, Republican candidate out of the Pearl River Delta between January and September
Romney vowed to label the PRC a “currency manipulator” on 2008. is gure is particularly relevant due to Guangdong
his rst day in o ce, thus triggering trade sanctions against and the Pearl River Delta’s status as one of the most heavily-
Chinese exports. Following the re-election of President Obama, invested areas in light industrial manufacturing, as well as
the U.S. Department of the Treasury—which department is being one of the most a uent. It was additionally reported
actually responsible for making the determination of currency that approximately 30 percent of foreign-invested enterprises
manipulation, not the President’s o ce—reported that the in Guangdong reported losses in that period.9
PRC’s control of the yuan did not meet the legal requirements
for it to be labeled a currency manipulator, although the same With signs of the global economic slowdown turning
more apparent, the Central Government became extremely
188 proactive at attempting to cushion companies from the
ill-e ects of the global issues, including the 4 trillion yuan
stimulus package, which included adjustments to VAT,
consumption and business tax regulations.10
Furthermore, the promising notion of increased domestic
