China against herself

by Yūkō Arayama

Will China's growing economy outstrip the economic power of Japan and the advanced industrialized democracies of the West? No. For China to continue its phenomenal growth and develop sustainable comparative advantage, it needs to secure a huge world market for its products and develop the technological and organizational capacity for innovation. According to Arayama and Mourdoukoutas, because China cannot secure these economic conditions, its role in the world economy will be limited to that of a mass producer of certain types of products. China's strength is its low-cost, mass-production capacity - but the lack of an ingrained capacity to innovate constrains China to transforming foreign innovations into lower-priced imitations.