SJS5 - “Impact of China’s Open-Door Policy on Pacific Rim Trade and Investment”

Source:

Park, Jong H. “Impact of China’s Open-Door Policy on Pacific Rim Trade and Investment.” Business Economics 28.4: 51-56. Print.

Author Credentials:

Jong H. Park is currently an assistant professor at Old Dominion University for accounting. He first obtained a B.A. in economics from Seoul National University in 1998 then he went to the University of Chicago where he received a M.S. in 2001. In 2004 he got his MSIA from Carnegie Mellon University then he stayed there and received his Ph.D in accounting in 2006. He has done research about many different topics mostly on issues concerning causes and consequences of financial reporting quality in capital market. His research has been published by many different economic journals which shows how important his research is. He is very well educated and experienced which allows him to conduct this research and get published multiple times.

Summary:

When Deng Xiaoping became head of the CCP he made many reforms to many different policies. One of the major reforms was the Open-Door Policy in 1978 which surpassed the old view of self-reliance and opened China up to foreign trade. The goal of this new policy was to use foreign trade, investment, and technology in order to modernize their country.  China was able to penetrate the markets of multiple industrialized countries including the United States. This policy greatly impacted China’s economy along with the countries they were associated with during this time. Between 1978 and 1990 the total amount of exports from China rose by 18% each year. This resulted in the emersion of China as a major exporting country. This growth was helped by China’s low labor costs and the competitiveness of Chinese goods in world markets. Some of the most successful products exported to advanced economy markets were textile yarn, fabrics, apparel, and clothing. They also became more competitive with the NICs (newly industrialized countries) in East Asia in the exporting of the more skill-intensive and capital-intensive products. These products included electronic machinery, appliances, and sound recording equipment. Not everything was going so well, however. China became a potential source of conflict due to the pre existing U.S. trade conflicts with Asia. As China joined the world economy, they also began to receive foreign aid to help fund their manufacturing businesses. The U.S., however, did not offer any foreign aid to China because they did not provide funding to Communist countries. Overall, there was a large increase in total factor productivity which led to the accelerated economic growth.

Analysis:

The author, Jong H. Park, makes a strong argument about the impacts of China’s Open-Door Policy on Pacific rim trade and investment by providing many subtopics which all contribute to his overall argument. Each subtopic provides evidence in different areas which add up to prove his argument to be valid. He does not voice his opinion much in the text, he mainly just uses facts to support his argument. He is a reliable source because he is well educated on the topic, provides sufficient evidence as support, and he uses facts rather than opinions.