CHINA

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CHINA
International Trade
and Competitiveness
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Economy

• Unemployment Rate 20 (2003)
• Inflation rate 1.9 (2005 est.)
• GDP (purchasing power parity) 8.158 trillion
  (2005 est.)
• GDP - real growth rate 9.2 (2005 est.)
• GDP - per capita 6,200 (2005 est.)
• GDP - by sector agriculture 14.4 (2005)
• industry and
  construction 53.1 (2005)
• services 32.5
  (2005)
• Second Largest Economy (PPP) After the U.S.
  (2005)
• http//www.cia.gov/cia/publications/factbook/geos/
  ch.htmltop

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Competitiveness

• The collection of factors, policies and
  institutions which determine the level of
  productivity (economic growth) of a country.
  (World Economic Forum)
• - The macroeconomic environment (33rd), the
  state of a countrys public
  institutions (56th), and the level of
  technological readiness (64th).
• - Ranked 49th in the world out of 117 (2005)
• - Medium Competitiveness
• - Marginal Deterioration since 2004
• How one country competes with another country for
  FDI.
• - The devaluation of the yuan increased the
  attractiveness of FDI in China by
  increasing exports and decreasing imports.
• - Devaluation reduced production cost
  Increased profit of foreign investors
  Higher Return that attracts more FDI inflows.
• http//www.weforum.org/site/homepublic.nsf/Content
  /GlobalCompetitivenessProgramme
• http//faculty.washington.edu/karyiu/confer/beiji
  ng03/papers/xing.pdfsearch'competitiveness20FDI
  20in20China'

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Competitiveness Cont.

• Index of Economic Freedom.
• The higher the score on a factor, the greater the
  level of government interference in the economy
  and the less economic freedom a country enjoys.
  (1-5)
• 112th out of 157 (3.34)
• Trade Policy 3.0 (1.5 pts. better than last
  year)
• FDI 4.0
• Mostly Unfree
• http//www.heritage.org/research/features/index/co
  untry.cfm?idChina

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Competitiveness

• In comparison
• - Both indexes are measuring different elements
  to achieve different goals, but the results of
  one index may effect the other.
• World Economic Forum Competitiveness is
  deteriorating when compared to previous years.
• Could be due to the lack of freedom measured in
  the Index of Economic Freedom.

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Barriers of Trade

• High Tariffs
• - Down to 17 from 42 in 1996
• Investment Restrictions
• - Contract Provisions
• Rules and regulations
• - Secretive, Hard to appeal
• Trading Rights
• - Number and Types Imported
• http//cnie.org/NLE/CRSreports/Economics/econ-35.c
  fm_1_10

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International Trade

• 1970s Reforms
• - Centrally Planned System to Market
  Economy
• - Foreign Trade and Investment
• - GDP increased more than 10xs since 1978
• World Trade Organization
• - November 2001
• - Tariffs, Foreign Competition
• China's primary trading partners include Japan,
  United States, European Union, South Korea,
  Taiwan
• Exports 436,100,000,000 (2005)
• - Export Partners US 21.5, Hong Kong 18,
  Japan 14.9, South Korea 4.8
• Imports 397,400,000,000 (2005)
• - Import Partners Japan 18.1, Taiwan 12.8,
  South Korea 9.7, US 9.2, Germany 5.6
• Major Export Products Light industrial and
  textile products, mineral fuels, heavy
  manufactures, agricultural goods
• Major Import Products Machinery, steel,
  chemicals, miscellaneous manufactures, industrial
  materials, grain

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Exports of goods surged 23.3 above the average
and imports surged 21.2 above normal http//www.e
co.utexas.edu/faculty/Norman/sup/E2-proj-S04/China
-India-Russia/Whole20Project.htm
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International Trade Totals( in Billions)
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Agriculture

• Large Producer of rice, potatoes, millet,
  barley, peanuts, tea, and pork
• Non Food Crops cotton, other fibers, and oil
  seeds
• Before WTO
• - 1970s 40 of GDP
• - 1997 20 of GDP
• Imports 25.9 billion (2004)
• - 30 of Imports
• Exports 15.8 billion (2004)
• - 45 of Exports
• Imports doubled between 2002-2004
• - Basic Commodities
• - More open Trade (WTO)
• - Lowered Tariffs (WTO)
• Half of Import growth Oils, Raw Soybeans
• http//www.ers.usda.gov/publications/WRS0504/wrs05
  04.pdfsearch'china2020agricultural
• http//aic.ucdavis.edu/oa/iartccarter.pdfsearch'
  china20agriculture20percent20of20GDP20trade'

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Agriculture Continued

• Exports grew more Slowly- 3 billion between 2002
  and 2004
• Major Exports Corn, vegetables, fruits,
  processed foods
• Exports to U.S. Increased 17.70 (02-04)

(Billions)
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Trade with the U.S.

• After WTO admission
• U.S. is Chinas Largest Overseas Market
• China is U.S.s 4th Largest Market (13 of
  imports) 2004
• Advanced Technology Sectors
• - Office and data processing machines,
  sound equipment.
• Trade Surplus U.S. 68.7 billion (1999)
• U.S. Deficit with China 15.8 billion (2005)
• http//www.usembassy.it/pdf/other/RL31403.pdf

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Trade with the U.S. ( In Billions)
http//www.uschina.org/statistics/tradetable.html
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Conclusion

• China has become the fastest growing country and
  has accumulated more FDI in the past seven years
  than almost every country in the world. However,
  according to the World Economic Forum and the
  Index of Economic Freedom, Chinas economy is
  slowing down. Do you think these predictions are
  true? If you do, how long will China be able to
  keep up with the demands that other countries
  have placed on them when referring to trade?