Wage, currency value rises dent China’s advantages

CHEN Zhi’ang¹ and ZHANG Liqiong ²

Professor, Dean of Finance College, Zhejiang Gongshang University

Candidate of Master of Science in Finance, Zhejiang Gongshang University

Abstract:

This paper analyzes the change in international competitive forces among China and other Asian countries from the labor force globalization perspective from 1991–2008, relative to labor cost parity. The results show that the renminbi reversed from real depreciation to real appreciation while other Asian currencies maintained real depreciation during the period. It also found that the differences in the VEC standard spread among China and other Asian countries were extended after the shock of financial crises. According to the results, this paper considers the optimal policy to stabilize renminbi exchange rates.

Key words:

Globalization of labor force, international competitive force, relative labor cost parity, Asia

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