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Analysis of China T-Shirt Rca Index

Essay by   •  October 8, 2018  •  Essay  •  1,569 Words (7 Pages)  •  57 Views

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Introduction:

Why did the author choose T-shirt as the object of observation? China is the World's 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 China's T-shirt export value and China's total commodity exports value in the past two decades, respectively. The export value of China's 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 China's 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, China's 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 China's 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)

2009 2010 2011 2012 2013 2014 2015 2016 2017

T-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 China's export value, China's T-shirt export value has always occupied an important position compared with the world's 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, China's 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 China's 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 China's T-shirt export is growing at a slower rate than China's 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.

Chapter 3: Horizontal comparison and competitor analysis.

The decline in China's 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?

Year China Bangladesh Turkey India Germany USA

1998 1731788800 377758896 1122455424 340013408 411140000 1032239929

2000 2275407934 527492628 1258198468 478968494 447404000 1553265653

2001 2233139361 496594742 1184825455 550432959 518195000 1214105429

2002 2470827830 555770348 1467723734 696317759 614016000 945387214

2003 3000386160 860096928 2058920900 898855299 858289000 894557513

2004 3914555225 1244700623 2486280809 835563512 1091948000 734653142

2005 5293989291 1474851428 2765043047 1118813334 1356457000 741465108

2006 7449349808 1886647722 2867920627 1480310744 1490807000 682918914

2007 8502412838 2087134339 3087539347 1628920792 1657729000 490156103

2008 8059598569 3124003554 2904341927 1619211265 1857535000 463477423

2009 5594435888 3146453534 2398379298 1945241689 1647177000 497320611

2010 7326897576 3845529104 2755467299 1697994043 1813036141 562252571

2011 7958573419 4832305585 3049124636 2073624149 2107401338 590363964

2012 7974086708 4694224928 3087437903 2093953113 1939942254 625378870

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