Question

China's location on the global value chain for a product

	A.	does not affect countries who are not participating in that global value chain.
	B.	can hurt countries outside that global value chain that are competing in the world market for that product.
	C.	benefits all other countries.
	D.	None of the above.

With China's location on the global value chain where a lot of assembly of various components is performed, we expect the gross value of trade to

	A.	overstate the amount of trade taking place.
	B.	understate the amount of trade taking place.
	C.	give an accurate picture of the amount of trade taking place.
	D.	None of the above.

Answer 1

1.B) Can hurt countries outside that global value chain that are competing in the world Market for that product.

China's location on the global value chain can hurt countries outside that global value chain that are competing in the world Market for the product because china has lower cost of product due to cheap labour.

2.B) Understate the amount of trade taking place.

With China's location on global value chain where a lot of assembly of various components is performed we expect the gross value of trade to Understate the amount of trade taking place.