The purpose of this essay is to take a more in-depth look at International Trade and its relation to China. More specifically, this paper will respectively look at three theories of International Trade, respectively Comparative Advantage; Factor Endowment and Autarky to demonstrate the benefits, the blockage standing in the way of a propelling China. In the next section, the discussion will point to the political debate in relation to free trade between China and other countries, in order to clearly understand different point of view in this controversial topics. The method used to conduct this study are the case study “Job losses and off shoring to China” and further research were made.

The definition of Comparative Advantage was first mention by David Ricardo in his 1817’s book “On The Principles of Political Economy and Taxation”, and was later redefined by Rugman and Collinson (2009) as a trade theory which holds that nations should produce goods for which they have the greatest relative advantage. For example, hypothetically, Russia and the US both produce missile and aircraft. However, Russia can produce missiles with lower cost, higher technology and faster production than the US. But the US can make twice as much aircrafts comparing to Russia. So, Russia should focus on producing missiles where it has the comparative advantage and the US should specialize in making aircrafts due to the same reason. And then, the two country trade with each other. So at the end of the day, both countries are better off.

There are available evidence suggesting that the theory of comparative advantage does apply to China, as the country has a large and cheap labor force, comparing to the EU, US, Japan, Korea,…etc. It is called the labor-intensive industry. According to the World Factbook, China has the population of more than 1.3 billion people, about one fourth of the world’s population (CIA, 2015). Therefore, China held a great supply of cheap labor.