World Library  
Flag as Inappropriate
Email this Article
 

China Circle

The China Circle refers to the economic relationship between the PRC, Hong Kong, and Taiwan. Professor Barry Naughton coined the term in his book, “The China Circle.”

During the 1960s and 1970s, Hong Kong and Taiwan specialized in labor-intensive manufactured exports that mainly went to the United States market. By the mid-1980s, however, rising land and labor costs, coupled with current realignments, created pressures for manufacturers to move to lower-cost locations. Additionally, national capabilities moved up as scientific education increased and commercial and financial experience accumulated. This created a “pull” for Hong Kong and Taiwan to move to high-skilled sectors.[1]

At the same time, China was opening up for foreign investment, and modeled parts of its economic reform after the successes of Taiwan and Hong Kong. This created an opportunity for Taiwan and Hong Kong firms to move their labor-intensive operations to their lower-cost neighbor, China. In the end, this created a regional production chain whereby Hong Kong and Taiwan specialized in high-value services and technology-intensive production and while the PRC took on the more labor-intensive manufacturing. This economic network is now known as “The China Circle.”[1]

Naughton attributes this move to three main factors. First, there was a global trend in increased intra-industry trade. Second, labor and land costs in China were low and access was made relatively open. Third, the common language and customs made cultural entry costs cheap.[2]

See also

References

  1. ^ a b Naughton, Barry. 2007. The Chinese Economy; Transitions and Growth. Cambridge: MIT Press. pp. 416-18.
  2. ^ Naughton, Barry. 1997. The China Circle: Economics and Electronics in the PRC, Taiwan, and Hong Kong. Washington DC: Brookings Institution Press


This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 


Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.