China's Comparative Advantage: An Economic Globalization Context

Economic globalization is a process during which governments of all nations eliminate restrictions on free flow of commodities, capital and labor force internationally for realizing free trade, investment, international flow of labor force and equalizing prices of productive factors worldwide. Increasing degree of economic globalization has played an active role in improving global economy potentials, enhancing professional levels and eliminating natural resource limitations. China benefits from development of economic globalization in that it obtains short productive factors from outside and then combines them with its prominent advantages, thus maintaining at high speed of economic increase, gaining more profit from international division of labor and gradually shaping key capabilities of research and development. For China, bringing its comparative advantages into play and creating competitive advantages are ways to effective participation in international competition and fast catch-up process in economic globalization context.The elimination of trade barriers and cross-national flow of commodities bring benefits of trade globalization to all trading nations in their process of globalization and gain them comparative advantages. The structure of comparative advantages underlined by traditional international trade theories is based on comparative advantages of a particular nation's industry. The trading layout resulting from the theory usually witnesses developed nations import labor-intensive products and export capital-intensive products, while for developing nations the case is just the opposite. However successful in explaining some trading layouts in reality, the theories have limits in themselves, for either the comparative advantage theory based on differences in labor productivity or the factor endowment theory based on productive factors is analyzing a nation's industrial structure from a static perspective. Each sets a hypothesis of unchanged resource endowment. Under the condition of current economic globalization, productive factors and resources can flow internationally. Besides, natural resources can be improved, synthesized or replaced via technological development. Furthermore, relating human resources, advantage in quality can compensate for disadvantage in quantity via investment. Although endowed with static comparative advantages, most developing nations do not necessarily own dynamic comparative advantages. Compared with traditional international trade theories, modern ones have applied a great deal of theoretical models on industrial organization, market structures, incomplete competition, economy of scale and product difference to explanation of new phenomena emerged within several decades since the end of World War Two, such as monopolistic competition, new technological protectionism and inner-industrial trade. Besides static factors (natural resources and productive factors) deciding division of labor, the factor of invention also serves as a basis for modern division of labor. The basis for impetus of international labor rests on all nations make invention, acquire new technologies or reshape existing technologies for obtaining new comparative advantages. Modern international trade theories are not negation of the traditional ones, but a complement and development of the latter.Economic globalization is the greatest opportunity for development that faces China in the 21st century. It facilitates China's economic growth and serves as an important way to narrow the gap between China and developed nations. China's comparative advantages are embodied in low cost of labor and subsequent advantage. Low cost of labor is a traditional comparative advantage of China. It is inappropriate for China to abandon too early the production and trade according to traditional comparative advantages, with current condition of economic development into consideration. With more industrial permeation of information technology and other modern ones, technological content of...