China's rapid economic upswing will offer unprecedented market
opportunities for neighboring economies in East and Southeast Asia
in the coming two decades, said a senior expert with the Asian
Development Bank (ADB).
China's growth has induced a variety of dramatic adjustments in
East Asia, but the benefits for every regional partner will
outweigh the costs if accommodating multi-lateral trade policies
are developed, said David Roland-Holst, a senior expert with the
ADB Institute.
Roland-Holst wrote a report, released on Friday, concerning China's
emergence and East Asian trade patterns through 2020.
With a PhD in Economics from the University of California at
Berkeley, Roland-Holst is also the James Irvine Professor of
Economics at Mills College and director of the Rural Development
Research Consortium at U.C. Berkeley.
"While China won't become the region's largest exporter until 2010,
it will be the largest East Asian importer by 2005," said
Roland-Holst, adding that the growth of China's internal market
will accelerate other East Asian economies' exports and income
growth and create historic opportunities for regional
investors.
According to the report, China will outperform Japan to become East
Asia's largest trading country by the year 2020.
"During the upcoming two decades of sustained and dynamic growth,
China will develop a structural trade surplus with Western
economies," Roland-Holst said. "But a deficit of about the same
magnitude with East Asia will arise, and most of the net benefits
of China's export successes will ultimately accrue to its regional
neighbors."
According to the report issued yesterday, China will play two roles
in the region due to its sheer size and stage of development. It
will stiffen regional export competition in a broad spectrum of
products.
"However, the other side of the coin is that China's long-term
growth trajectory will make it a prominent importer in East Asia,"
Roland-Holst said. This aspect has attracted less attention because
China's internal economy is still emerging, he added.
China's economic emergence over the last two decades, and in
particular its recent accession to the World Trade Organization,
portends a dramatically changed landscape for East Asian trade.
With more than US$50 billion in foreign direct investment (FDI),
China outperformed other economies to receive the most FDI in the
world in 2002, and its foreign trade hit US$600 billion for the
first time.
This has aroused concern around the region, where China's success
as an exporter is perceived as a threat to other economies that
rely on external demand as an essential source of growth.
This report presents an empirical analysis of China's regional
economic emergence, intended to improve long-term visibility for
policy makers, help overcome the threat-bias and better identify
the opportunities for other East Asian economies on the
horizon.
"The future benefits and costs for individual East Asian economies
will depend upon the extent to which they adapt to more open
multi-lateralism," said Roland-Holst, adding that only in this way
can they avoid being crowded out of their established export
markets and fully capture new export opportunities.
(China Daily January 18, 2003)