CHINA: Class 4 Integration of China into the global economy.
-
date post
22-Dec-2015 -
Category
Documents
-
view
215 -
download
2
Transcript of CHINA: Class 4 Integration of China into the global economy.
CHINA: Class 4Integration of China into the
global economy
Prior to the reform period
Self-reliance--AUTARKYonly resort to trade when
necessaryprohibit foreign investmentno participation in World Bank,
IMFavoid dependence on foreign aid,
loans
TITLEIndicator of
magnitude of change
merchandise trade
value &
% of GDP
Value of exports + imports as percent of GDP
0
10
20
30
40
50
1977-78 1992
China
India
Indonesia
Bangladesh
Brazil
Mexico
Japan
USA
USSR
A little misleading???
Value of total exports (Billions $US)
0
20
40
60
80
100
120
140
1980* 1994*
China
Mexico
Brazil
South Korea
Thailand
Malaysia
Value of Exports 1997
0
20
40
60
80
100
120
140
Value 1997 % change 1990-97
China
Korea
Singapore
Taiwan
Malaysia
Thailand
Indonesia
Plus re-exports through Hong Kong (almost doubles?)
Annual % change 1990-
97
Foreign private capital investment to:
Diversify industrial baseaccess to new technologyupgrade managerial and labor
skills
Major source of tension
Trends--cumulative FDI in billions $US
0
5
10
15
20
25
1979-84
1985 1986 1987 1988 1989 1990
Cumulative FDI
Net Private capital Flows (billions $US) 1994
0
10
20
30
40
50
Net private capital flows ($US billions)
China
South Korea
Malaysia
Thailand
Mexico
Brazil
Example of a spatial diffusion process
Some regions were opened up earlier and more fully
result: substantial unevenness of participation
Export share of provincial Gross State Product, 1990
Example of Foreign Trade
Province Share of Total Chinese Exports, 1990
199444%???
Device--Special Economic Zones
Initially set up Guangdong and Fujian provinces--s.e. coastal provinces close to Hong Kong and Taiwan
Think of as Export Processing Zones
various incentives were offered to attract FDI
Concept of bamboo network
Descendents of those forced out of China
Why so important?Dissatisfaction with response of
US, Japan etc.language and cultural linkages
Sources of Chinese FDI, 1987-91 (100 million $US, contracted
value)
0
50
100
150
200
U.S. Japan Hong Kong Taiwan
FDI value
Hong KongInitial role was one of entrepot
for Chinese tradepost-1949. Became major mfg.
center thanks to emigrants from Shanghai (textiles, plastic flowers, rattan furniture--> electronics, precision machinery)
from mid 1980s massive transfer of mfg. capacity to China (Guangdong)
Impacts on Hong Kong economy
Dramatic decline in manufacturingfrom 1,000,000 ---> 386,000 workersfrom 45% ---> 16% of workforce
increasingly specialized in business services--finance, marketing, transport communications services to Chinese industrial economy
Issue: Contribution of foreign investment to
Chinese economic growthPrior to 1990, FDI was less than 1%
of GDPuntil 1991, virtually all of industrial
output of foreign-invested companies was exported--no domestic market presence
conclusion--economic reform was the initial key
A closer look at textile and clothing
exports
Textile exports by developing economies
0
5
10
15
20
25
30
35
40
1970* 1985 1994
China
NIEs
ASEAN
South Asia
Latin America
% of total for developing economies
Developing economies(US$billion)
2.2 16.7 55.3
World (US$billion) 12.1 52.3 126.0
Clothing exports by developing economies
0
10
2030
40
5060
70
80
1970* 1985 1994
China
NIEs
ASEAN
South Asia
Latin America
Developing economies(US$billion)
1.5 24.9 93.1
World (US$billion) 5.7 46.6 150.3
Future trends???
tariffs on textiles and clothing are scheduled for elimination by 2005China should profit especially if
admitted to WTOBUT. Changes in rules of origin for
US market make assemblage country the country of origin.May hurt China
DEMAND SIDE
Impact of trade agreements likeNAFTApreferential trade agreements between
EU and Turkey and Eastern EuropeJapan’s intention to apply
restrictions on exports of Chinese textiles and clothing1994: China accounted for 54% of
Japan’s clothing imports
Supply side factorsSome shortages of labor in
coastal regions will create supply constraints unless Chineserelax constraints on migration out of
areas with surplus unskilled laborimprove infrastructure in inland
areas to promote industrial expansion there