China's Economy (Subject) / Perspective on China‘s Role in the Global Economy (Lesson)

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• Zero-sum logic: Mercantile/ Geoeconomics a) Geoeconomic/ mercantile perspective (zero-sum logic) (specially US thinking either them or us grows-> China’s rise threatens American position, not enough place in the world for every economic power. -> Summit experience from Doris, former ambassador said, Germany will lose title of export champion, and actually did, but what is that title worth? What will G lose really? But: the more power you have, the more important you are; has rather to do with prestige than with actual economic development
• Neo-classical logic: Global Welfare b) Global Welfare logic (neo classical logic): the more trade, the more wealth-> ppl are better off than in the past; but comes along with income inequality/ climate change connected to industrialization & globalization; issues: how to protect the rules of the game?
• Institutions matter: Global governance c) Global governance (institutions matter) needed to secure rules of the game; global rules, fair trade; example reduce limitations for foreign firms investment in China, but less ppl. believe in it, because already promised for so long; one could say: very difficult to implement new rules quickly in such a huge country; e.g. intellectual property rights.We need common rules on global scale, but it’s hard for China to implement new rules of law and more difficult to guarantee that those rules will be kept-> for all categories can be said, that the challenge is China’s size! -> if C has more demand for any product, it changes global trade development, e.g.  garlic, chocolate, oil etc. -> C doesn’t fit in in a classical trade model
• Economies of Scale Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods. Costs can be both fixed and variable.
• Classical Trade Theory Ricardian model with comparative advantage, (England cotton & Portugal wine)
• New trade theories incl globalization: value chains; different production places and reimporting etc. Product goes through different stages/ phases and there’s different value added in each stage: R&D/ design/production, assembly/ marketing-> model: value high in R&D and marketing e.g.; example iphone. Economies of scale in Africa-> different explanations why countries trade
• Barriers to Trade according to WTO: goal should be to change non- tariff barriers into tariff barriers, that we can assess impact better, because it would be more difficult to harmonize it with quotas or safety regulations -> easier to regulate tariff barriers; “tariffs are bad, non- tariff barriers are worse”   - spaghetti bowl of trade agreements, very complicated bilateral agreements   - dumping cases: tariffs in that case allowed; infringement if W.T.O.; national security and health are exceptions; but otherwise countries are allowed to raise tariffs. Example solar panel; according to WTO rules China not yet accepted as market economy, because of anti-dumping regulations

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