Macroeconomics 11th Edition by Michael Parkin

Exercise 1

In the news clip in the Problem, who will gain and who will lose from the trade in goods that the news clip predicts?
The End of Cheap Chinese Goods
Beginning in the 1990s, as China emerged as a major exporter, the prices of many goods fell. For example, clothing prices fell through 2007 when they bottomed out. But as China's labor costs started to rise, clothing production moved from China to other countries.
a. Explain why China emerged as a major exporter of clothing through 2007.
b. Explain why cheap Chinese goods are disappearing. Explain why China no longer exports cheap clothing.