China's Domestic Demand Boosts Asia's Economy

Although the global economy and international markets have been slackening in recent years, exports from major Asian countries and regions to China are still rising.

According to Chinese customs statistics, the exports of Japan, Malaysia, the Philippines, Singapore, the Republic of Korea, Thailand and Hong Kong to the Chinese mainland in 2000 respectively surged more than 20 percent over the previous year.

During the first quarter of this year, their exports to the Chinese mainland again rose more than 10 percent year on year, with the Philippines hitting a new high of 72 percent.

Many economists hold that China has grown into an important market for many Asian countries and regions whose economies rely heavily on external demand.

They share a consensus that China's sustained expansion of domestic demand has enabled it to play a stronger role in accelerating the growth of the regional economy.

China, with an increasing domestic demand subject to little external influence, is expected to replace Japan as the leading driving force for Asian economy, said Sir John Bond, chairman of the Institute of International Finance (IIF).

The slowdown of U.S. economy, uncertainty in the economy of Europe and economic recession in Japan have jointly exerted a negative impact on Asia's economy, which is taking a downturn soon after recovering from the bitter aftermath of the 1997 financial crisis.

Facing sluggish external demand, the Chinese government has taken a series of measures ranging from lowering interest rates to issuing more treasury bonds to stimulate internal demand, which has not only invigorated its domestic market, but also injected vitality into the economies of neighboring countries and regions.

The gross domestic product (GDP) of China's mainland has kept increasing by 8.3 percent year on year since 1996, and it topped US$1 billion in 2000. The GDP growth rate is expected to stand at about 8 percent for the first six months this year, reliable sources said.

The growth of the Chinese national income has resulted in the growth of industries like real estate, tourism, telecommunications, which helps maintain a vigorous consumption market at home.

With the annual growth rate reaching 10.6 percent, China's retail sales added up to some 14 trillion yuan (about US$1,765 billion) in the past five years. The growth rate for this half year could be maintained at 10.3 percent, according to initial statistics.

"The Chinese economy is mainly driven forward by it constantly strengthening domestic demand, which will never pose any threat to neighboring countries, but on the contrary will bring them tremendous benefit," said Jiang Ruiping, a professor of international economics with Beijing-based Foreign Affairs College.

Actually, many businesspersons in Asia have come to regard China as their leading foreign market and planned to make large investments in China.

In the past five years, China absorbed as much as US$289 billion in overseas investment, three-quarters of which came from East Asia and of the US$800 billion worth of imports, half were manufactured in Asia.

When delivering the "Report on the Outline of the Tenth Five- Year Plan for National Economic and Social Development (2001-2005) " early this year, Chinese Premier Zhu Rongji reiterated that China will adhere to the guideline of expanding domestic demand over the long term.

The Chinese State Economic and Trade commission has recently publicized a number of five-year plans for various industries, which include a plan aiming to raise the national output of automobiles by a large margin of 55 percent.

According to sources with Chinese Ministry of Foreign Trade and Economic Cooperation, China is supposed to import US$1.4 trillion worth of goods and technologies in the next five years, which will provide abundant opportunities for Asian countries.

China's impending entry into the World Trade Organization (WTO) is also expected to provide more chances for its Asian neighbors, experts said.

The exports of Japan and Southeast Asia to China will double and rise 20 percent, respectively, when China becomes a WTO member, according to the survey conducted by the World Bank.

Nowadays, more and more overseas investors are drafting or implementing their strategies of running business in China.

Chia Tai Group, a Thai giant that entered Chinese market very early, has invested more than US$4 billion in China and opened nearly 200 plants producing agricultural and livestock products.

Chia Tai Group has always taken an optimistic attitude toward Chinese market, and will expand its business in the commercial sector, said Dhanin Chearavanont, chairman of the board of the group.

"It is time to regard China as the most important country in Asia," said Dr. Lawrence Klein, winner of the Nobel Economics Prize of 1980.

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