Presentation on theme: "1 I China’s emergence in the World Economy Basic figures of the World Economy China’s emergence… … and a few consequences II Economic relations in Northeast."— Presentation transcript:
1 I China’s emergence in the World Economy Basic figures of the World Economy China’s emergence… … and a few consequences II Economic relations in Northeast Asia Economic relations: Multilateralism / Regionalism / FTA Asian regional institutions China’s trade China and the economic relations in Northeast-Asia
2 I China’s emergence in the World Economy
3 World Economy GDP (billion $) Pop (millions) GDP per Capita ($)GDP PPPGrowth 1United States11, ,00040,0004 2Japan4, ,00030,0002 3Germany2, ,00028,0002 4United Kingdom2, ,00031,0004 5France2, ,00029,0002 6Italy1, ,00028,0002 7China1,6501,3001,2705, Spain1, ,000 9Canada1, ,00030,000 10India7001, ,000 11Korea ,00020, China is 20% of the world population and 5% of its production; the US is just the opposite. China is now at the same development level as Japan around 40 years ago.
4 China’s emergence… 9% of growth since 1978 GDPX7 in 25 years Industrial Revolution Liberalization of agriculture industrialization + urbanization, but what differs is the size of the plane, its engine and the time of its take-off GDP per capita doubled in the first 8 years in China, it took Great-Britain 58 years Sources of growth: Consumption Investment Trade Leading destination for FDI: $ 550 billion since 1980, 53% by Foreign Invested Companies gains in productivity rural migration better living condition Middle-class conjunctural, fluctuating Foreign Dependence Another plane is taking off?
5 Competition with other developing countries (Mexico, end of MFA) Competition for commodities (oil, 40% of world copper, 25% of steel) … and a few consequences China is becoming an ever stronger competitor in almost any market Business investors shifted their focus from South-East Asia to China after Asian financial crisis & China’s accession to WTO China is also an engine of growth: ASEAN experienced a growth in trade with China of 35% in 2004 & a trade surplus of $20 bn Even for FDI, the growing interest in China can also lead MNC to locate other aspects of their operation in Asia for proximity to investments in China Challenge Opportunity World workshop (cheaper products) World market (more than 1,000 KFC) the size of domestic market is one of the main reasons of US leadership today Regionally Globally
6 II Economic relations in Northeast Asia
7 Multilateralism - Rounds of multilateral negotiations aiming at liberalizing trade under the GATT in 1947, and then inside the WTO since 1995: 148 equal members (MFN), Japan joined in 1955, Korea in 1967, 7 ASEAN countries in 1995 «one of the most important developments in China since the reform era began» Thomas G. Moore Tariff rates: 40% in 92 20% in 99 10% for industry and 15% for agriculture Typology of regionalism (Balassa, 1961) Preferential Trade Area Unilateral advantagesEU + ACP Free Trade Area No Internal TariffNAFTA Customs Union FTA + Common External TariffMERCOSUR Common Market CU + free flow of factors (W, K) Economic Union Harmonized Economic PoliciesEU Economic relations (I) Dispute Settlement Body and China in 2001
8 Free Trade Agreements: more and more FTA appeared after the sinking of multilateral negotiations in Seattle and Cancun: 30 agreements in 90 150 in China: discussions with ASEAN since 2000 but also Australia, Chile, New Zealand… - Japan: Singapore (2002) and Mexico (2004) + ongoing negotiations with Malaysia and Thailand (2005), discussions with Australia, ASEAN… which have an impact on internal reforms (improving market access and introducing market forces in protected sectors such as agriculture or services) but overall on its influence in Asia Regionalism vs Multilateralism Multilateralism is based on the Most Favored Nation Status (GATT ‘s 1st article) but regional agreements are allowed by WTO (GATT’s article 24) if they aim at facilitating trade between members and not at raising new barriers to non members Regionalism can sometimes prepare for multilateralism (China joining APEC in 1991 before joining WTO) or be its product (Mexico joining NAFTA after GATT) Economic relations (II)
10 Regional Institutions ASEAN (1967) ASEAN Post Ministerial Conference (1974): outside powers invited after the conference TAC: Treaty of Amity and Cooperation (1976): non-interference, China signed in 2003 ARF: ASEAN Regional Forum (1993): security, Joint Declaration on the Conduct of the Parties in China Sea (11/2002) ASEAN+3 (Japan, China, South Korea, 1997) APEC (1989) East Asia Economic Group (1990) East Asia Economic Caucus: Malaysian initiative to counter APEC without non-Asian country members, in order to promote « Asian values » TRADP: Tumen River Area Development Program (1991): multilateral forum intense in the early 90’s (China, South and North Korea, Mongolia, Russia) ASEM: ASia Europe Meeting (1996) SCO: Shanghai Cooperation Organization (2001): security (against terrorism), China, Russia and Central Asian States AFTA: after China’s FTA proposal with ASEAN (2000) Free Trade Area (“2010”) CMI: Chiang Mai Initiative (1998): swap schemes to moderate monetary fluctuations Boao Forum for Asia (2001): Asian version of the global Davos World Economic Forum after AFC center of gravity for economic regionalism marginalizes Taiwan, unlike APEC & WTO
12 « Bilateral trade underscores the fundamental connection between economics and politics » 25% 0.2% 7% 2% 13% 7% 18% 7% 16% 14% 24% 8%
13 China’s trade with the United States China overtook Mexico as the 2 nd leading supplier of goods Trade surplus ($175 billion in 2004) Interdependence United States: China’s top trading partner Foreign Exchange Reserve: $711 billion
14 Thank you everybody 謝謝大家 Some questions to conclude 1.Will China be able to sustain its high growth rate for another 25 years (bottlenecks like transparency and corruption, state-owned companies, financial and fiscal systems…)? Even if it could, at what price (rural-urban / social / regional disparities, pollution…)? 2.How do you see the future of economic relations in Northeast-Asia? Still through market-driven and informal integration or under a formal institution (ASEAN, APEC…) ? 3.Will China and Japan’s economic interdependence end up improving their political relations, or will their political tensions end up poisoning their economic relations? 4.Will China always be ready to buy US Treasury Bonds and lend it the money it needs to purchase its products? Won’t they one day prefer spending money too? 5.Will China continue to under-evaluate its money or will it crack against US pressure?