Analysis of China T-Shirt Rca IndexEssay Preview: Analysis of China T-Shirt Rca IndexReport this essayIntroduction:Why did the author choose T-shirt as the object of observation? China is the Worlds biggest textile clothing exporter. T-shirt is a very typical and representative product of this industry, and now especially loved by all ages. Does the export of T-shirt show an advantage as well ? This is what the writer is interested in exploring firstly.
Secondly, with the disappearance of Chinese demographic dividend and rise of labor cost, which is bound to be a lasting blow to the competitiveness of exports, in this context, how should T-shirt industry compete and develop, as the representative of the textile industry.
Chapter 1: Analysis of 1998-2017 China T-shirt industry export value.As shown in the figures, they show the changes of Chinas T-shirt export value and Chinas total commodity exports value in the past two decades, respectively. The export value of Chinas T-shirts has gone through a decade of golden growth since 1998 and The scale of production has continued to expand. In 2007, the export value of Chinas T-shirts exceeded $8 billion. Despite a recession in 2008 and 2009, exports fell by more than 30%, but then it began to recover and exceeded the $10 billion mark in 2014. But since then, exports have been falling for three consecutive years.
From the comparison with China total exports value, it shows that before 2009, the growth of T-shirt export and the growth of the total export is synchronous, even though the total export growth is greater than the textile industry. But after 2009, the watershed, Chinas total exports passed through the economic crisis shocks and began to increase, while T-shirt exports are still recovering from 2010 to 2012, and relatively stagnant. When Chinas total exports resumed in 2017, T-shirt continued to decline, and almost returned to the same level as in 2008.
Growth Rate(compared to last year)2017T-shirt-30.59%30.97%8.62%0.19%13.74%12.27%-6.31%-9.46%-5.44%Total-16.01%31.30%20.32%7.92%7.82%6.03%-2.94%-7.73%7.90%Although the T-shirt industry does not perform well relative to Chinas export value, Chinas T-shirt export value has always occupied an important position compared with the worlds T-shirt export value. And the fluctuations in world T-shirt export value and world export value are basically synchronous.
Chapter 2: Analysis of 1998-2017 China T-shirt industry RCA index.RCAi=（XiC / XtC）÷(XiW / XtW )XiC means the export value of China T-shirts, XtC means the export value of China, Xiw means the export value of T-shirts in the world, and XtW means the export value of the world.
Using the data in chapter one and the formula, RCA index is calculated, as shown in the figure.1．According to the RCA index, Chinas T-shirt export has always had a very strong comparative advantage, because the RCA index has never been lower than 1.5. Before 2008, it even had been greater than 2.5.
2. It is also thoughtful that Chinas comparative advantage in T-shirt export is declining, and the decline is obvious, indicating that the golden age of T-shirt export has passed.
We can not help asking why the export of China T-shirt has always been the number one in the world, but the comparative advantage is decreasing. There are two reasons we will talk(There are, of course, many other reasons, including exchange rate changes and trade policies and so on, but we will not discuss them here.): the first is that Chinas T-shirt export is growing at a slower rate than Chinas overall exports, which means that some other Chinese products are becoming more productive and promising than T-shirt, thus reducing the number of the molecule XiC/XtC and it also leads to the decrease of RCA with little change in the denominator Xiw/XtW. And the second reason comes from other competitors.
The exchange rate is growing so fast that there is a good reason to think that a change in the currency in China will mean slower growth of China’s manufacturing sector, possibly to a lower level and in combination with a decrease in the price level of China’s goods and services, i.e. in China as a whole.
You can read more about these factors in detail in my essay: Understanding Chinese Imports and China Wants a Big Change in the World.
Note that I, for example, do not know how the exchange rate might affect trade between China and the United States:
We are far from a perfect world, as the world economy is still growing on a relatively stable basis, but in my opinion the situation is really far worse than it was in 2000.
This is not to say that China should be responsible for any changes in the exchange rate, but because of their current circumstances, we need to be more honest about it. In a world full of economic crisis, let’s say that a financial crisis, or a global financial crisis like Japan, has set off some major financial fluctuations and global markets are in danger of completely collapsing. If you were a large Chinese company at this point, you would want to diversify.
Let me illustrate this point very clearly: A single financial crisis will set off a cascade of political turmoil, potentially even chaos, not only within the country itself but it will cause major upheavals within this government so that it becomes a large economic power in much broader terms with the United States and China and especially between Beijing and Washington. Let’s consider a few scenarios:
Our country is on a path to the financial crisis. It is not our responsibility to prepare for this and there is going to be a lot of pressure on Beijing to follow through.
China is going to do something to prevent US financial institutions in the US from interfering in Chinese business and that is to open up these financial institutions more. So this is not just a Chinese problem, but a regional one too with the US on the brink of this global financial crisis.
How will the relationship between China and the United States in the United States change? A very different one that focuses on the United States.
In the global economy, we will continue to see the impact China has had on this world: the trade imbalance between the two countries is growing rapidly and at the same time the US is slowly becoming the world’s largest trading partner.
Our country’s trade has risen markedly in recent years as the dollar has become increasingly used to support real estate for our small business owners, particularly in the United States, as well as for international players such as many Asian countries. We
The exchange rate is growing so fast that there is a good reason to think that a change in the currency in China will mean slower growth of China’s manufacturing sector, possibly to a lower level and in combination with a decrease in the price level of China’s goods and services, i.e. in China as a whole.
You can read more about these factors in detail in my essay: Understanding Chinese Imports and China Wants a Big Change in the World.
Note that I, for example, do not know how the exchange rate might affect trade between China and the United States:
We are far from a perfect world, as the world economy is still growing on a relatively stable basis, but in my opinion the situation is really far worse than it was in 2000.
This is not to say that China should be responsible for any changes in the exchange rate, but because of their current circumstances, we need to be more honest about it. In a world full of economic crisis, let’s say that a financial crisis, or a global financial crisis like Japan, has set off some major financial fluctuations and global markets are in danger of completely collapsing. If you were a large Chinese company at this point, you would want to diversify.
Let me illustrate this point very clearly: A single financial crisis will set off a cascade of political turmoil, potentially even chaos, not only within the country itself but it will cause major upheavals within this government so that it becomes a large economic power in much broader terms with the United States and China and especially between Beijing and Washington. Let’s consider a few scenarios:
Our country is on a path to the financial crisis. It is not our responsibility to prepare for this and there is going to be a lot of pressure on Beijing to follow through.
China is going to do something to prevent US financial institutions in the US from interfering in Chinese business and that is to open up these financial institutions more. So this is not just a Chinese problem, but a regional one too with the US on the brink of this global financial crisis.
How will the relationship between China and the United States in the United States change? A very different one that focuses on the United States.
In the global economy, we will continue to see the impact China has had on this world: the trade imbalance between the two countries is growing rapidly and at the same time the US is slowly becoming the world’s largest trading partner.
Our country’s trade has risen markedly in recent years as the dollar has become increasingly used to support real estate for our small business owners, particularly in the United States, as well as for international players such as many Asian countries. We
Chapter 3: Horizontal comparison and competitor analysis.The decline in Chinas T-shirt export comparative advantage means the rise of other countries’ comparative advantage, so which countries in the world are also producing T-shirts in large quantities and exporting them?
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