China's competitive leadership strategy in the context of globalisation challenges

Abstract

The thesis is devoted to substantiating the theoretical and methodological foundations and developing practical recommendations for the formulation of a strategy for countries' competitive leadership in the context of global challenges, in particular, on the example of China's competitive leadership in the context of globalisation. Chapter one identifies the main drivers of international trade. It is determined that international trade is based on Ricardian comparative advantage. However, new research in this area is opening up new sources of comparative advantage. Traditional theories are based on relative advantages in the productivity of capital and labour, as well as on differences in factor endowments. New theories have revealed comparative advantages, such as heterogeneity among firms in the same industry, contractual imperfections, and the influence of government institutions on international trade. The paper identifies the following main factors that influence China's foreign trade: the development of the international division of labour and internationalisation of production; integration into the World Trade Organisation (WTO); China's foreign exchange policy; the impact of the Сторінка 1 з 13 global financial crises; the low level of trade in services in China; the importance of innovation and the production of low-value-added products. The main directions of China's foreign trade strategy are as follows: reorientation from «self-reliance» to export; import of technologies and equipment from outside for technical re-equipment of own production; attraction of foreign investment and formation of a favourable investment climate; use of loans and credits from international financial organisations and foreign countries; active development of coastal regions and participation in regional economic organisations; diversification of forms of management of foreign economic activity. It is determined that the results of cooperation between countries within the framework of the «One Belt, One Road» initiative are as follows: Asian Infrastructure Investment Bank (AIIB); The University Alliance of the New Silk Road (UANSR); Strategic Union of Higher Education Institutions and the Tourism Union of the Belt and Road Cities. The first chapter also substantiates the strategic priorities for the formation of competitive leadership of countries on the basis of research on ways to implement China's One Belt, One Road initiative in the context of globalisation challenges, namely: ensuring regional leadership through expansionary policy; development of financial and logistics infrastructure; introduction of neo-protectionist instruments in foreign economic policy; economic integration of the countries participating in the initiative. Chapter two identifies that, over the past 40 years, China has pursued a policy of openness to foreign markets, thereby shifting the centre of business activity from Europe and America to Asia. Despite China's economic growth rate slowing over the past 10 years, it remains the largest player in the global market, as evidenced by its exports and imports. The quantitative and qualitative analysis of foreign trade relations between Ukraine and China shows that these relations have been developing since Soviet times, when specialists from Ukraine were sent to China to exchange experience, particularly in the metallurgical and agricultural sectors. In 2011, ties between the countries became closer with the signing of the Declaration on Strategic Partnership between Ukraine and China. In 2013, the foreign economic relations between the two countries received a further impetus for development after the Chinese leader announced the One Belt, One Road initiative for inclusive globalisation. The cooperation between Ukraine and China within the framework of this initiative is definitely beneficial for both sides: Ukraine is located at the geographical centre of Europe and is of strategic importance for the transit of Chinese vehicles to Europe. It has been determined that the development of further foreign economic relations between Ukraine and China within the framework of the One Belt, One Road initiative should also be inclusive for Ukraine. Within the framework of this cooperation, Ukraine should leverage not only its transit potential but also its comparative advantages in high-tech industries identified in the analysis. The author has improved the scientific and methodological approach to the technological efficiency of bilateral trade relations as the basis for the formation of international competitive leadership of countries, in particular, an algorithm for determining the level of technological efficiency of international trade between two countries has been developed, which includes the following sequence of actions: decomposition of the trade portfolio of countries in bilateral trade and identification of groups of high-tech goods; determination of the shares of high-tech products in mutual trade; calculation of the index of Сторінка 2 з 13 comparative p [0; 1] – the country's specialisation in the production of a product is insufficient; [1; ∞] – the country has comparative advantages or specialises in the production of the product. Chapter 3 «China's Competitive Leadership in the Face of Globalisation Challenges» identifies that China's «One Belt, One Road» strategy of competitive leadership for Central Asian countries has a number of advantages. First of all, it concerns infrastructure development, which is a very urgent issue because it is outdated and focused solely on communication between Central Asian countries. Also, all countries in this region need investment, and China offers financial resources on favourable terms. The paper systematizes approaches to interpreting countries’ competitive leadership in the international trading system, grounded in a combination of state management decisions, institutional mechanisms, and strategic behavior in foreign markets amid globalization challenges. It further develops theoretical provisions on the relationship between regional economic integration and the formation of competitive leadership which, in contrast to existing approaches, are complemented by a substantiation of management mechanisms for involving partner countries in integration-driven trade and economic processes. The author improves the mechanisms of forming a strategy of regional inclusiveness in the system of international trade interaction on the example of the «One Belt, One Road» initiative determines that China's regional economic integration is seen as involving neighbouring countries in the region in global value chains in which China participates as a technological leader.