StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Trade Patterns in China and Hong Kong - Research Paper Example

Cite this document
Summary
From the paper "Trade Patterns in China and Hong Kong" it is clear that the World Trading system is increasingly becoming globalized with countries like Hong Kong and China signing agreements as “One Country, Two Systems”, the world today seeks a tariff-free world…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.4% of users find it useful
Trade Patterns in China and Hong Kong
Read Text Preview

Extract of sample "Trade Patterns in China and Hong Kong"

? Trade Patterns in China and Hong Kong 05-17 Trade Patterns in China and Hong Kong Countries all around the globe traded with each other since the pre-historic period. Why do they do so? All the countries have varying capital, human, and natural resources and also they have diverse ways of combining these resources. Not every country is self-sufficient in producing everything that its population needs. Every good has its opportunity cost, which is the cost of that good in terms of any other good or service that would other have been produced. Each country thus produces the goods which have lower opportunity cost as compared to other goods and hence trade with other countries for goods that bears high cost of production for the country. (National Council on Economic Education) But some countries like Hong Kong plays an intermediation role for the trade of land lock countries such as China. Hong Kong acts as an entrepot for China. Hong Kong supplies semi-manufacturing goods as well as raw materials to Mainland China by importing from rest of the world. In exchange, it re-exports the manufactured goods from China to rest of the countries of the world. (Schoen, 2010) The two basic theories of trade flows are the absolute advantage and comparative advantage. Absolute advantage believes that a country should only produce those things which it can by using least possible resources. The absolute advantage China has in comparison to Hong Kong is China’s low-paid workers who are very beneficial in production of labor-intensive goods. Hong Kong comparatively have high cost of living due to which people of Hong Kong are hardworking. However, sometimes the effects of comparative advantage theory outweigh Absolute advantage as countries focus on goods with least opportunity goods as mentioned above. In this situation, a country with a comparative advantage can export same goods to a country in which the later country have an absolute advantage. Hong Kong does have a major comparative advantage over Mainland China in Publishing Industry, Demonstration Industry, Cultural Experience tourism industry and Child rearing industry. (Liu) China, being the leader of low-priced manufactured goods obviously does have a comparative advantage over Hong Kong because of its cheap labor. These labor-intensive processed goods allow China to produce almost anything from house hold products to daily usage goods, and clothing, electronic items etc. Almost all day to day products are manufactured by China today. (Oblad, 2009) Both the governments of Hong Kong and China should encourage the development of those industries in which they have a comparative advantage so that their exports should flourish and trade among them would increase. China should rely on its clothing industry, low cost electronic items and daily products from battery cells to laptops to sell them at a cheap rate to Hong Kong and attract people from there as Hong Kong relatively has a high cost of living as compared to Mainland China. (China Global Trade). The Government of Hong should play a proactive role in development of Demonstration Industry as Hong Kong does have an advantage over China in this sector. People from China can visit Hong Kong for Demonstrations for human rights, etc. and in exchange Hong Kong can take rent from Chinese people for these demonstrations. There are a lot of books which are not allowed to be published in Mainland China and thus Hong Kong can produce these books with its growing Publishing Industry. Also, the people of China can have as many children they want in Hong Kong as there is no restriction as such one-child-policy of China in Hong Kong. The Government of Hong Kong will take care of raising the child but Chinese do have to pay fees obviously.  The cultural experience tourism industry also offers to Chinese the books, newspapers, movies, and websites that are banned in China. Thus both the countries could benefit by focusing on their comparative advantages (Xanga. 2012). The Government of China signed CEPA (Closer Economic Partnership Arrangement) with Special Administrative Region of Hong Kong in 2003. It allowed for free and unrestricted trade between the two nations. Further, supplements were added to it; in 2004, Supplement I was added; in 2005 Supplement II was added; Supplement III was added to this agreement in 2006; Supplement IV in 2007; Supplement V in 2008, and the last Supplement VI was finally added in 2009. The Closer Economic Partnership Arrangement also called for established cooperation between Hong Kong, mainland China and Macao. This agreement is a trademark of trade and economic exchange and collaboration between mainland China and Hong Kong. This agreement is a Free and unrestricted trade agreement which is now completely integrated into Chinese mainland (the first FTA to be completely executed in China), and in the separate territories of Macao and Hong Kong. This agreement allowed for zero tariffs for goods of Hong Kong in China and also for Chinese goods in Hong Kong markets. (China FTA Netwrok, 2012) The World Trading system is increasingly becoming globalized with countries like Hong Kong and China signing agreements as “One Country, Two Systems”, the world today seeks a tariff free world. Each country is becoming concerned about tariffs on trade and is trying to reduce or most importantly, abolish tariffs in trade. As a manager, one should study the patterns of these drastically changing patterns of international trade as countries not only trade for exchange of goods but also trade as intermediaries just as the case with Hong Kong and China.( People’s Daily, 2002). Most of the coastal countries are becoming free ports such as Malaysia, Singapore, Dubai, etc. These free ports allow for tariff free trade for all the countries of the world and have led to an augment in trade and development of the world. Today, managers should bear in mind all the possibilities and outcomes of this rapidly altering pattern of trade and thus should focus their attention likewise. If one will study the economic conditions and trade developments comprehensively, he or she will improvise enhanced business opportunities for the world. Managers should have a comprehensive knowledge of world trade system to prosper in the business arena. Bibliography Xanga. 7th May 2012. Industries which Hong Kong has comparative advantage. [ONLINE] Available at: http://climbuptreestolookforfish.xanga.com/716091610/industries-which-hong-kong-has-comparative-advantage/ People’s Daily. November 7. 2002. Researcher: China Enjoys Comparative Advantage in Labor Cost. [ONLINE] Available at: http://english.peopledaily.com.cn/200211/07/eng20021107_106425.shtml China Global Trade. What are the U.S and China’s current Comparative Advantages? ChinaGlobalTrade.com [ONLINE] Available at: http://english.peopledaily.com.cn/200211/07/eng20021107_106425.shtml China FTA Netwrok. May 17, 2012. Economic and Partnership Agreement. China Free Trade Agreements: Mainland and Hong Kong closer. [ONLINE] Available at: http://fta.mofcom.gov.cn/topic/enhongkong.shtml National Council on Economic Education. Why Nations Trade .  National Council on Economic Education, New York, NY. From Geography: Focus on Economics, Lesson 3. [ONLINE] Available at: http://ecedweb.unomaha.edu/lessons/feog1.htm Oblad, Mark. November 9, 2009. Theories of Trade Flows. [ONLINE] Available at: http://www.markoblad.com/index.php?option=com_content&view=article&id=59:theories-of-trade-flows&catid=36:economic-models&Itemid=54 Liu, Li-gang., Fan, Kelvin., Shek, Jimmy.Hong Kong's Trade Patterns and Trade Elasticities. Ideas. [ONLINE] Available at: http://ideas.repec.org/p/hkg/wpaper/0618.html Schoen, John W. October 20. 2010. Hong Kong thrives as gateway to China trade. China 2.0 on msnbc.com.[ONLINE] Available at: http://www.msnbc.msn.com/id/39546755/ns/business-world_business/t/hong-kong-thrives-gateway-china-trade/#.T7TR8esthYA Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Trade patterns in China and Hong Kong Research Paper”, n.d.)
Retrieved from https://studentshare.org/marketing/1399044-see-instructions
(Trade Patterns in China and Hong Kong Research Paper)
https://studentshare.org/marketing/1399044-see-instructions.
“Trade Patterns in China and Hong Kong Research Paper”, n.d. https://studentshare.org/marketing/1399044-see-instructions.
  • Cited: 0 times

CHECK THESE SAMPLES OF Trade Patterns in China and Hong Kong

The Workings and Products of the Creative and Hugely Accepted Current Hong Kong Film Industry

I have also focus to pursuing explore on the growing interface among the Hollywood and hong kong film industries, identifying and analyzing latest trends in mutually (moreover, the growing use of CGI in Hong Kong; the claim of Hong Kong construction methods to film series like the Matrix and Lord of the Rings trilogies), and will like tentative Hong Kong's advance to reinventing traditional accepted film genres.... The Majority of hong kong residents have admittance to a broad series of sports, frivolous and cultural facilities....
6 Pages (1500 words) Essay

Economic Reform of China

wo factors contributed tremendously to the growth of economy in china.... Another factor which plays a major role in this revolution in china is Productivity gains.... DIRECT FOREIGN INVESTMENTS in china:The major factor for China's economic growth is Direct Foreign Investments.... CHINA trade patterns:China becomes the trading power in result of economic revolution.... For the success of economy, china is an example for many countries....
5 Pages (1250 words) Essay

The Effect of Globalization on Hong Kong Business

The author of the present research paper "The Effect of Globalization on hong kong Business" states that the ongoing process of Globalization and economic evolution in the industry will favour companies with strong brand equity, a loyal group of recurring customers and a proven record in innovation.... New News about globalization is that the comparative productivity, price, exchange rates, transportation costs and customs duties and or tariffs will continue to affect patterns of sourcing; a new set of factors related to the distribution of products plays an increasingly vital role....
10 Pages (2500 words) Research Paper

History of China: Song Dyansty to 1800

Social organization during the Song rule was rather complex and several largest cities in the world (over one million) emerged in china during this era.... The Song Dynasty that ruled china between 960-1279 AD was the sixth dynasty in Chinese history.... During the Northern Song (960-1127), the Song capital was in the northern city of Bianjing (now Kaifeng) and their rule spread over the inner china.... Therefore, the Southern Song (1127-1279) relates to the period after the dynasty lost control of northern china to the Ching Dynasty (Ebrey, 1999)....
4 Pages (1000 words) Essay

Should Wal-Mart opens in Hong Kong

The PEST analysis has established that hong kong is a thriving business and financial centre with a stable economy and currency and the policy of free market economy continues despite its annexation by China.... The World Bank has ranked hong kong as the 4th Best Place to do Business in the world.... ver since the political power was handed over to Mainland China in 1997 by the British government, hong kong has functioned as an autonomous region with minimum control from the mainland....
4 Pages (1000 words) Essay

The Role of Hong Kong in International Trade

he activities associated with the import and export industry can be categorized as imports, domestic exports and re-exports and hong kong have embraced a free trade policy while erecting limited barriers to trade.... This report aims at identifying the critical role that is associated with hong kong in terms of international trade and how this may have an effect on the business operations of the company.... It provides an investigation into the international businesses associated with hong kong....
4 Pages (1000 words) Research Paper

Comparison of US and China patterns of trade

For instance, China seeks to export more textile and clothing products to substantiate its labor-intensive industry, as well as abundance presence of labor in china.... The purpose of this research is to examine and explore trading patterns (exports and imports) of china, the U.... Categorically, china, the United States, and EU have different patterns evident in their approaches and decisions on exports and imports.... and china totaled to $579 billion....
10 Pages (2500 words) Essay

Hong Kong and China after 1997: The Real Issues

Now, the research method is conducted by taking interviews in three field surveys at Macau, Taiwan, and hong kong.... This paper "hong kong and China after 1997: The Real Issues" presents the study of two academic research articles - 'hong kong 1997 in Context' by Priya Raghubir and Gita Venkataramani Johar and 'hong kong and China after 1997: The real Issues' by William H.... The former was published after hong kong gained autonomy from British rule while the latter was published before that....
10 Pages (2500 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us