Vitamin C for China
By now, we are all most likely aware of the growing economic super-power that is the People’s Republic of China. Over the past few years, China has brought itself into the forefront of economic prosperity in the world. Here I present to you an example of China’s growth and some of the problems that are associated with that growth. As China becomes more dominant in manufacturing, it is able to more easily and more frequently have the ability to direct and control prices of products. One example of this are the concerns about vitamin C. After the European-Japanese cartel was displaced in 1997, China was able to flood the market with low-cost vitamin C. China holds a comparative advantage in production of vitamin C which is imported to the US for uses such as livestock feed, preservatives and nutrients, and for pharmaceuticals and diet supplements. Since 2001, the price of one kilogram of vitamin C has risen from $3 to $9. Some are accusing the Chinese of price dumping in which they would be illegally selling products abroad at below cost to win market share. One of the worries is that this vitamin C model will spread to other Chinese production cases such as the pain reliever acetaminophen. How much regulation, if any, should the rest of the world impose on Chinese exports?
3 comments:
On one hand, China has a comparative advantage in production Vc,and this advantage helps China making money. On the other hand, the rest of the world is saving their labor source from producing Vc; therefore, they could probably put their labors into other productions which they hold comparative advantages in, and make money from exporting them to China. That is international trade, and it is good for the whole world.
The price of a product is decided by the price of resource, the price of labour, the relationship between supply and demand,etc. The reason why China can produce Vc cheaper than any other places is because of the price of the factors mentioned above. Compared with America and Europe, the price of labour is much cheaper than what you thought. Then the people from the country which imported the goods from China hardly understand the reality. They hardly abondon their criterion and without paying any attention to What's the average price of labour in China, they judge China dumping. But anyway, as Xiaojue Chen said, this is the so called World Trade. Both sides benifit.
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