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Products 'Made in China', and their economic consequences on the Western Powers

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  1. Introduction
  2. A willingness to reduce sources of instability in the market
    1. G20: Principles
    2. The difficulties of a practical application
  3. The main contribution of macro-prudential regulation in the control of risks
    1. The mechanism of pro-cyclicality of credit: What interventions are possible?
    2. What policy on capital adequacy adopted to insure against the cyclicality?
  4. Conclusion

The great revolt of 1911 ended Imperialism in China. However, the end of imperialism did not bring about major changes or economic benefits to the country. It was not until 1949 that China was able to see reforms. Mao Zedong, a Han Chinese revolutionary leader, brought about a few reforms that gave birth to the People's Republic of China. He also led the People's Republic of China from 1949 to 1976. The country succeeded on many fronts under his rule and a lot of stability was achieved, all thanks to the reforms introduced by him. However, one shortcoming of these reforms was that the country was not able to become an actor on the international stage.

The country started looking at "socialist market economy" and the world outside for the first time, only through the efforts of Deng Xiaoping. However, the old political system was retained. In the new era, China gradually was starting to become a major player not only in the industrial sector, but also in textiles and manufactured goods. This vision of socialist market economy enabled China to become a major player in certain areas and compete with the Western powers. Today, China is not content with just being one among the major trading powers of the world. It is slowly trying to ascend to the position of the first world power. Since the early 80s, companies have set up branches in China and produce goods out of these branches.

The number of goods on which the label 'Made in China' was found, increased. However, in recent years, the multinational companies who offshore business to China are not the only ones to produce and sell their products worldwide. Now, the Chinese firms produce and export the products around the world, and these products are priced the lowest. Therefore, the question is: How will the Western Powers face the competition emanating from the new products that are "Made in China" and what will the economic consequences of this be?

The reasons for outsourcing can be broadly summarized into two major issues: the economic one, namely to produce cheaper in countries known as "low cost", the other strategic or geographical, one is to enter the local market .
First, the primary cause is constituted by a desire to produce less.From this perspective, offshoring has many advantages. Indeed, they often occur in countries where production costs are very low. This is the case in China, although the trend is increasing these costs.

These low costs allow in particular to improve the margin of manufactured goods, and thus improve the profits of the company that relocates its production. Indeed, one of the current issues is competitiveness. Relocating can offer competitive prices compared to competition. Among these advantages, the first is the benefit from cheaper labor. The cost of labor, also known as labor costs, can be defined as the total costs for the companies to pay the work factor of production . So the total cost incurred by the employer for the use of labor is covered.

Tags: Products that are made in China; competition from goods manufactured in China; consequences on the economy of western developed countries;

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