CHANGES IN LOW-INCOME COUNTRIES' WAGES AS A RESULT OF CHINA'S TRADE LIBERALIZATION

Abstract

The rapid expansion of China's economy and the subsequent liberalization of its commerce have far-reaching implications for the world's LICs. Focusing on the implications for labor markets and income distribution, this research analyzes how China's trade liberalization has affected salaries in LICs. This study aims to shed light on how China's trade policies have affected wage dynamics and societal shifts by reviewing the relevant literature.China's exports have increased as the country liberalized its trade policies and opened up to international markets. The flood of Chinese imports has affected wages in LICs, both positively and negatively. Cheap Chinese imports have especially hard-hit wages in businesses that heavily rely on human labor. Because of this, low-skilled employees in LICs face more competition and less bargaining leverage, both of which contribute to wage stagnation or decline. The rise of China's exports, however, has opened new doorways for economic development and increased employment in LICs. Increased demand from China has fueled employment growth and pay inflation in LICs' comparative advantage sectors, including natural resources and specialized manufacturing. Chinese investment in low- and middle-income countries (LICs) has boosted local economies by creating jobs and raising salaries in the manufacturing and infrastructure sectors. The overall effect of China's trade liberalization on LICs' salaries is nuanced and sector-specific. Economic diversification, trade patterns, and the structure of LIC economies all play a role in determining the size and direction of these impacts.