cross-posted from: https://scribe.disroot.org/post/9156148
Here is the full study: China's mercantilist squeeze on developing countries (pdf)
- The "China Squeeze" affects low- and middle-income countries through three major channels: intense competition in global export markets, rising Chinese import competition in their own domestic markets, and limited access to China’s own consumer market for low-skill-intensive exports from developing countries.
- The scale of the squeeze is historically unprecedented and may represent hundreds of billions of dollars in lost exports and forgone jobs in labor-intensive manufacturing in developing countries.
- Macro indicators on wages, productivity, and exchange rate policy suggest that distortions, especially an undervalued renminbi, may have played a role. Regardless of the cause, China’s dominance may be closing off the traditional manufacturing-led development path for low- and middle-income countries.
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China’s resurgent trade surplus has revived concern in the United States and Europe, but consequences for low- and middle-income countries (LMICs) remain underappreciated.
This paper documents a “China Squeeze”: China’s compression of the industrialization space poorer economies need in labor-intensive manufacturing.
Using historical benchmarks and labor-endowment comparisons, we show that China, despite becoming richer and moving up the technology ladder, still commands a historically unusual share of global low-skilled manufacturing export markets. We estimate that this squeeze costs LMICs hundreds of billions of dollars in forgone exports.
It also operates through rising Chinese import competition in LMIC markets and China’s limited absorption of low-skilled imports from poorer countries. Macro evidence suggests that policy distortions, including exchange rate undervaluation, may have amplified the squeeze.
The central concern is developmental: China’s export strength may close off pathways to industrialization for poorer economies.
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How quaint