China and the Global Terms of Trade

For many years, the declining terms of trade of commodities relative to manufactures has dominated development thinking and strategy. Initial evidence suggests that the rapid deepening of China's participation in the global economy in recent years has begun to have a significant impact on global prices, reducing the rate of price increase in manufactures, and raising the prices of commodities. The existence of a very large army of labour in China, India and elsewhere in Asia suggests that these trends may be sustained in the future. If sustained, this has significant implications for the research agenda, for theory and for development policy.