“…A plethora of articles analyzing the drastic growth of China's exports have been published in academic journals, magazines and newspapers. According to these studies, fundamental factors determining the significant growth and worldwide expansion of China's exports include: (1) abundant labor endowment and corresponding comparative advantage in labor-intensive products (Adams, Gangnes and Shachmurove, 2006;Wang 2006); (2) the reforms of domestic institutions, such as the transition to an market oriented economy, the adoption of export-led growth strategy and unilateral trade liberalization (Hu and Khan, 1997;Lin, Cai and Li, 2003); (3) improved market access for China's exports through institutional arrangements, namely the WTO membership, bilateral and multilateral free trade agreements and the abolishment of multi-fiber arrangement (Branstetter and Lardy, 2006;Prasad, 2009); (4) the exchange rate regime adopted by the Chinese government and the undervalued currency (Naughton, 1996;Marquez and Schindler, 2007;Thorbecke and Smith, 2010); and (5) massive inflows of export oriented foreign direct investment (Zhang and Song, 2000;Whalley and Xin, 2010).…”