China's Robust Growth Benefits Other Countries

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Last updated at: (Beijing Time) Monday, March 10, 2003

China's Robust Growth Benefits Other Countries

China's top advisers said a robust Chinese economy is a blessing for other countries, rather than a threat.

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China's top advisers said a robust Chinese economy is a blessing for other countries, rather than a threat.

As China grows, it will become a bigger market for the rest of the world, said economists and members attending the ongoing first session of the 10th National Committee of the Chinese People's Political Consultative Conference (CPPCC).

There had been talk that China had forced down prices globally by grabbing a greater share of the international market with its low-priced exports.

Lin Yifu, a CPPCC 10th National Committee member and also a noted economist, disagrees.

Li said China's export enterprises mostly trade in processed goods. Any growth in such exports would require a corresponding increase in imports -- that is, every US$100 of exports requires at least US$50-70 worth of imports.

China's thriving processing trade therefore means an expanding market for many economies, Lin said.

China (including the Hong Kong Special Administrative Region) already imports more from the rest of Asia than Japan does.

The capital that flows into the Chinese mainland also mainly comes from Hong Kong and Taiwan.

In contrast, the capital invested in South-East Asian countries mainly comes from the United States and Japan, Lin said.

Unlike in Japan and the Republic of Korea, industrial development in China is mostly driven by domestic demand, he said.

For example, last year, sales of cars in China exceeded 1 million for the first time, and are expected to rise by another fifth this year.

Volkswagen and General Motors are among the biggest winners from the trend, because even when the cars are assembled locally, many of the components are imported.

China is now VW's biggest market outside Germany.

"Such patterns in exports and imports are, no doubt, beneficial to other countries,'' Lin said.

Hu Angang, director of the Centre for China Studies with the Chinese Academy of Sciences,

added that China, as a destination for exports from other economies, is also opening wider, significantly lowering its tariff levels after joining the World Trade Organization.

"In this sense, China is importing deflation,'' Hu said.

Hu said the impact that China's exports have exerted on global price levels was overstated.

He said the effect is insignificant considering China's exports accounted for a mere 5 per cent of the world's total.

Jia Qingguo, a CPPCC 10th National Committee member and a professor of international relations with Peking University, said it is understandable that a fast-growing China will draw worldwide attention.

Of those who regard China as a threat, some have ulterior motives, but most simply do not understand China, the professor said.

A close analysis of relations between China and other economies revealed "there was no need for other countries to worry that China's increased export of products made by cheap labour would squeeze their market shares,'' Jia said. (China Daily News)

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