Drivers of Exports Competitiveness in Manufacturing: A Comparison between China and Germany

Abstract

In recent years, globalization has brought significant development opportunities to various economies worldwide, including influences for export-oriented economies such as China and Germany. This paper examines the export competitiveness of China and Germany in terms of labor market conditions and non-price factors, as well as the impact of China as an emerging economy on German manufacturing export competitiveness. Labor costs, productivity, and market reforms are considered to analyze labor market competitiveness. Non-price competitiveness is examined through explorations of product innovation, quality, and high-tech products. This article found that China's manufacturing export advantage is primarily due to the low labor cost of its workers, and FDI contributes to China's technological and high-tech export advancements. The competitiveness of German exports is attributed to the labor market reforms in Germany and the innovation and high quality of its products. On the other hand, wage inequalities exist in both China's and Germany's manufacturing industries. The study also finds that while emerging economic giant China has gained significant export market share, Germany can remain competitive.