Editorial»
China makes new friends in the developing world
JAN 14 - China may well be the favorite whipping
boy of manufacturers in the United
States these days. But in the developing world, the country is becoming the trading partner of choice, drawing in airplanes from Brazil, soybeans from Argentina and seafood from Malaysia, boosting economies and leading to new political alliances.
Brazil’s exports to China surged 81 percent in the first 11 months of last year to $4.23 billion, according to the Brazilian government. The rest of Asia - Australia, Brunei, Hong Kong, Indonesia, Japan, South Korea, Macao, Malaysia, New Zealand, Papua New Guinea, Philippines, Singapore and Taiwan - exported 44 percent more to China in the 10 months through October, or $219.7 billion. Malaysia sent 16.2 percent of its foreign shipments there in the first half, five times as much as in 2000. China’s gross domestic product grew 8.5 percent in 2003, the fastest of the world’s 10 biggest economies.
The growing appetite of the world’s most populous nation has made China a new source of income for the developing economies of South America and Asia. While the United States remains the worldwide market of choice, importing $14.9 billion from Brazil and $220 billion from Asia - excluding China - through October, Chinese consumers are now the biggest alternative for commodities and goods from Latin America and Asia.”
China’s booming imports from developing countries - especially of commodities - are not only helping growth in countries from Brazil to Africa, but are already reshaping international trade relations,” said Kenneth Rogoff, an economics professor at Harvard University, who is a former chief economist at the International Monetary Fund.
Last year, President Luiz In?o Lula da Silva of Brazil persuaded China to join a bloc of developing nations that forced the collapse of World Trade Organization talks by demanding that the United States and Europe abandon their farm subsidies. In October, leaders of the Asia-Pacific Economic Cooperation forum refused to support President George W. Bush’s call that China stop pegging the value of the yuan to the dollar.
Developed countries also are sending more goods to China, the world’s sixth-largest economy, with an estimated $1.334 trillion gross domestic product in 2003, according to the IMF. China bought 89 percent more from the euro region in 2002 than in 1999, according to the Statistical Office of the European Communities.
U.S. exports to China jumped 22 percent through October while shipments from Japan climbed 38 percent. In Germany, Europe’s biggest economy, exporters shipped 26.9 percent more goods to China in the first 10 months of 2003 than a year earlier.
China’s rise as a customer is diminishing the role of Japan in Asia and may shrink the influence of the United States in the global economy, Charlene Barshefsky, the U.S. Trade Representative during the Clinton administration, said in a recent interview.
”Because China is driving Asian regional growth, you see spillover diplomatic effects,” Barshefsky said. “It’s a movement of leverage to China from what had been unquestionably Japan’s to wield.”
When China opposed the Bush administration over the war in Iraq, “we didn’t see any diplomatic fallout as a result, in part because the economic relations are so important,” she said. .Even as China joined with Brazil to help scuttle the WTO talks last September, the current U.S. trade czar, Robert Zoellick, made a point of thanking China’s commerce minister, Lu Fuyuan, for his help in creating a “positive mood” and declared that “China was a good partner here.” Zoellick declined through a spokesman to be interviewed for this article, and the spokesman declined to comment or to respond to written questions.
”China is importing from others and selling to us,” said David Malpass, chief global economist for Bear, Stearns in New York. “As in any commercial relationship, they are treated well as a customer. This raises China’s importance relative to that of the U.S.” Consequently, he said, “the U.S. has to think carefully about this as it develops its strategy in negotiations for free trade, in the UN and so on.” Will the economic clout of the U.S. decline? “That’s going to happen no matter what,” said Stephen Roach, chief economist of Morgan Stanley in New York. “Over 1995 to 2002, the U.S. accounted for almost all of the growth” in the global economy.
The size of China’s economy will surpass that of the United States by 2039, according to a report last year by Goldman Sachs economists Dominic Wilson and Roopa Purushothaman. At $11 trillion, U.S. annual gross domestic product currently is almost 10 times China’s. .China’s emergence as a magnet for foreign direct investment may reduce the growth prospects for countries such as Mexico, South Korea, Singapore, Malaysia and Thailand, said Douglas Irwin, a trade historian and economics professor at Dartmouth College in Hanover, New Hampshire.
”It also could make it more difficult for some developing countries to take advantage of demand for labor-intensive manufacturing products if they haven’t entered that market yet,” Irwin said. For example, he suggested it may be too late for African and Latin American countries to compete in textile markets because of China’s dominance. .China’s appetite for food, raw materials, steel, machinery and computers is having the greatest impact among developing economies such as Brazil’s. The South American country is the world’s biggest exporter of iron ore, coffee, orange juice and soybeans. For all of last year, Brazilian exports to the United States rose 8.8 percent to $16.9 billion; exports to China surged 80 percent to $4.5 billion. ”
The growth in China has been astonishing,” Mauricio Botelho, chief executive of the aircraft maker Embraer, said in Sao Paulo. .Embraer invested $26 million in a factory in China to build its 30 to 50-seat ERJ jets, seeking to tap a market that the company expects to absorb 650 small and medium-sized aircraft over 20 years, Botelho said. He declined to forecast orders or potential revenue from China. .Brazilian companies such as Rio de Janiero-based Vale do Rio Doce, the world’s largest iron ore producer, are digging mines in the Amazon, adding steel mills and factories and planting more crops to feed demand from China’s 1.3 billion people. .”China demands highways, water and sewage plants, new homes, everything,” said Fabio Barbosa, chief financial officer at Vale do Rio Doce.
Brazilian soybean farmers added enough crops to cover an area the size of Israel for this year’s harvest, buoyed by orders from Chinese grain traders. The government expects demand from China for oil, meal and other products to fuel a 10 percent increase in soybean exports this year, to $8.8 billion.
Argentina has also benefited. Argentine commodity exports to China almost doubled last year to $1.3 billion.
Incomes are rising enough to allow people to eat more these days,” said Wang Xiaoli, manager of the soybean trading department of Dalian Beiliang, a grain trading company based in the northern China port city of Dalian.Posted on: 2004-01-14 01:55
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