China Rise: A race to the top or bottom and the impact on the world’s players

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Chinas rise: A race to the top or bottom and the impact on the world’s players

Introduction
Chinas open reform period is characterized as one without a blueprint but by ‘groping for stones to cross the river’, based on an incremental, gradualist approach to reformation. China is still a developing country, with pockets of industrialized regions. While China relishes in the fruits of its labour, there is an increasing disparity between the urban and rural areas due to this disequilibrium of development. China’s presence on the world stage has drastically increased and has left many researchers perplexed about the consequences of its rise. There exists a plethora of studies, debating whether Chinas current path is one that is headed to
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Contrastingly, FDI for Asian countries has increased, Hong Kong, Macao, Taiwan, Japan, the Philippines, Thailand, Malaysia, Singapore, Indonesia and South Korea, surged 23.88 percent to $52.53 billion (Yang, Chen, Monarch, 2010). While there has been increasing reports suggesting that wage increases has led to decrease in FDI this trend may be more illustrative of an increasing interest and access in high technological and service sectors, areas in which China does not have a comparative advantage yet (Yang, Chen, Monarch 2010). Outward FDI to Asian countries other than China is not an automatic indicator of China “losing out” as different regions are accessed for industries that may be complementary to China as in the case of India. Compared to its neighbouring countries, Figure 1 Source: (Yang, Chen, Monarch 2010)
Chinas manufacturing wages are still very low as seen in Figure 1. Therefore while increased earnings has surged manufacturing wages in the latter part of the 1990s Chinas wages are still below Malaysia, Thailand and the other Asian Tigers. However China holds a significant share of the working labour population within Asian region, therefore while wages are lower than the majority of its neighbours it has been theorized that that Chinas wage inflation has impacted the rise of the wages of its neighbours especially those in labour intensive industries (Yang, Chen, Monarch 2010). Additionally, the increase in China wages in

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