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China's role in int'l division of labor changing

By Li Yuyang (China Economic Net)

16:29, September 23, 2011

Edited and Translated by People's Daily Online

As China accelerates the process of upgrading its industry, the country's manufacturing industry is gaining ground in global competitiveness, and the basic feature of the country's trade relations with developed countries is transforming from a vertical division of labor into a mixture of cooperation and competition.

China quickens steps for economic restructuring

The changes in China's role in the international division of labor are manifested in the upgrading of its industries and the expansion of industrial chains. While promoting the development and competitiveness of emerging industries, China is also expanding its traditional industrial chains by increasing emphasis on high-value-added products and core technologies.

In recent years, China has been accelerating economic restructuring, promoting the transformation of its foreign trade growth pattern, developing internationally competitive brands, and improving the quality and production efficiency of export goods. The overall technological level and bargaining power of Chinese exporters have increased, and the export prices of China's labor-intensive products, such as textiles, garments, plastic products, suitcases and bags, have also risen. China's foreign trade is witnessing coordinated growth in the quantity and price of exports, and its export growth pattern has transformed from a quantity-driven growth pattern into one driven by quality and price.

The average export prices of Chinese textiles and clothing grew nearly 25 percent in July, and their quantity grew nearly 1 percent. Meanwhile, the average export prices of Chinese shoes and hats grew nearly 19 percent, with their quantity growing over 1 percent.

The export prices of the country's labor-intensive products increased partly because the prices of certain raw materials increased and partly because China's economic restructuring and transformation of the economic growth model improved the international competitiveness of domestic companies. Experts believe that the economic reforms will exert even greater positive effects on China's foreign trade in the future.

Rise of high-end industrial products

China's labor-intensive industries still enjoy comparative advantage, and the competitiveness of its new industries is increasingly high. China has continued to expand its coverage in the global industrial chain.

Currently, China is gradually building up new competitive edges in high-tech and high-value-added products and has independently developed a series of products that are characterized by independent intellectual property rights and brands, high technology and high added value. China has also made substantial progress in high-end industrial products, such as automobiles, integrated circuits and medical devices.

The combined annual revenue of the major Chinese enterprises in electronics, information and manufacturing industries was up by 460 percent between 2001 and 2010, and the revenue of enterprises in the software industry was up by 17 times and in telecommunications industry, revenues were up by 760 percent. China's automobile output hit 18 million in 2010, ranking first in the world. Chinese enterprises take three positions among the world's top five fiber-optic network access equipment producers, ranking first, second and fourth, respectively.

China’s exports of high-tech mechanical and electrical products have been on the rapid rise, becoming a major driving force behind the upgrade in China's export product structure. China recorded nearly 1.6 trillion U.S. dollars in the trade value of mechanical and electrical products in 2010, including 933 billion U.S. dollars in exports. The export value of China’s mechanical and electrical products accounted for 60 percent of the country's total.

Recently, the information department of the U.K.-based Economist magazine issued a report on the development prospects of China's export realms in the next 10 years. The report listed 37 areas in which developed countries are still holding dominant positions, but Chinese enterprises are catching up, including the realms of shipbuilding, electrical installation, agricultural machinery and hoisting crane. The report predicted that in the near future China would turn into a heavy construction machinery export country second only to the United States.

"The pace of China's improvements to the composition of its export products is accelerating. A series of high-grade, high-precision, advanced products made in China, including the high-speed railway, large aircraft and manned space flight equipment, has astonished the world. A series of accidents, including the mine disaster rescue of Chile and the nuclear leak crisis of Japan, has also objectively offered rare opportunities for China's technological equipment manufacturers, such as the Sany Group," said Mei Xinyu, a researcher from the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce of China.

Building up a full global industrial chain

The in-depth change of China's status in the international division of labor can also be reflected in the fact that the Chinese market has turned into an important part of the global market.

China has already turned into the second largest import country in the world and an important export market for many countries. The Chinese market is expanding day by day and becoming a source of advantage for China's large-scale industries. China is not only the largest direct investment destination country among developing countries but also changing into one of the most important investor countries in the world.