Trade between China and The Netherlands: a case study of trade in tasks

Abstract

Purpose

This paper argues that the recent rise in China Dutch trade is a typical example of two nations trading tasks rather than goods.

Design/methodology/approach

China Dutch trade growth between 1996 and 2010 is compared with China's trade growth with its main partners. In addition, the composition of China Dutch trade (based on level 1 and level 3 standard international trade classification (SITC)) between 1996 and 2010 is evaluated and three short case studies are discussed.

Findings

China Dutch trade has been growing too fast and too high tech to be explained by Ricardian trade theory. Instead the data fit neatly to the recently proposed theory of trade in tasks. It seems the Dutch have outsourced tasks such as assembly and production to China and other Asian countries, while China has been outsourcing distribution and trade management activities to The Netherlands.

Research limitations/implications

This paper uses sound reasoning and some empirical evidence but no formal model or regression. The arguments of this paper could be strengthened further by using for example gravity equations of Dutch China trade.

Social implications

The governments of China and The Netherlands should invest in strengthening their respective comparative advantages in tasks. Currently, there is too much focus on R&D. Instead, the Chinese Government should invest more in their innovation capability and the working conditions of assembly workers. The Dutch should focus more on knowledge and skill in the orchestration of production and distribution.

Originality/value

This paper proposes a very different view on trade and provides a recent and typical example of two nations exchanging tasks.

Citation

Den Butter, F. and Hayat, R. (2013), "Trade between China and The Netherlands: a case study of trade in tasks", Journal of Chinese Economic and Foreign Trade Studies, Vol. 6 No. 3, pp. 178-191. https://doi.org/10.1108/JCEFTS-03-2012-0004