1. Effects of High Economic Growth of China on Asia-Pacific Economies
Koichi Ishikawa
Institute for Asian Studies
Asia University

2. How does China’s economic growth affect Asia-Pacific economies?
Through trade
Export: supply of low-priced products → beneficial to consumers but disadvantageous for producers (and employees)
Import: increase of manufactures and raw materials
Through inward investment
Through outsourcing
By movement of natural persons

3. Rise of China in World Trade
($ million)
Export
1990
1995
2000
2004
Rank 14 12 7 3
Value
62,091
148,700
249,203
622,808
Import 17 13 8
53,345
132,084
225,094
581,727
(IMF,IFS)

4. Main Exporters to China
($ million)
2001
2002
2003
Japan
30,941(7.7)
40,012(9.6)
57,474(12.2)
Republic of Korea
18,190(12.1)
23,753(14.6)
35,110(18.1)
USA
19,182(2.6)
22,128(3.2)
28,368(3.9)
EU15
26,649(1.2)
32,221(1.3)
44,984(1.5)
ASEAN5
14,991(4.1)
19,915(5.2)
28,212(6.7)
In parenthesis: share of exports to China

5. Main Importers from China
($ million)
2001
2002
2003
USA
102,278(9.0)
125,192(10.8)
152,436(12.1)
Japan
52,016(16.5)
55,694(18.3)
68,021(19.7)
Republic of Korea
11,561(9.1)
14,917(10.9)
19,718(12.3)
EU15
56,065(2.7)
64,798(3.0)
92,168(3.6)
ASEAN5
15,747(5.6)
21,261(7.3)
25,762(8.1)
In parenthesis: share of imports from China

6. Net Exports to China (Trade Balance)
（$ millions)
2003
USA
－123,068
EU15
－47,179
Japan
－10,547
Republic of Korea
15,393
ASEAN5
2,450
Taiwan
11,514

7. FDI to China
($ million)
1995
2001
2002
2003
Hong Kong
20,060
16,717
17,861
17,700
Japan
3,108
4,348
4,190
5,054
USA
3,083
4,433
5,424
4,199
EU15
2,131
4,183
3,710
3,930
Republic of Korea
1,043
2,152
2,721
4,489
Taiwan
3,162
2,980
3,971
3,377
World
37,521
46,878
52,743
53,505

8. Concentration of investment in China
(%)
2003
Hong Kong
55.2
Republic of Korea
15.0
Taiwan
6.8
Singapore
4.2
Japan
1.0
USA
0.3 UK
0.2
(Investment of Country A in China ÷Total FDI in China)÷（Outward FDI of Country A ÷World outward FDI)

9. Share of Main Exporters to USA
1990
2003
NAFTA
24.4
35.5
EU15
20.0
23.2
Japan
18.1
10.8
China
3.1
8.6
Republic of Korea
3.7
3.2
ASEAN5
5.5
6.1
Taiwan
4.6
2.4

10. USA(1) Trade deficit with China NAFTA and EU expand export share
Trade diversion: increased exports from China caused by trade diversion from other East Asian countries to China
Trade diversion caused by FDI to China
Exports by US firms investing in China

11. USA(2) Returns from investment in China
Procurement of parts and components from China
Outsourcing
Infringement of IPR
Industrial hollowing-out (Foundries in USA decreased from 6,150 in 1955 to 2,480 in 2004)
Loss of customers

12. Japan
China plus Hong Kong: Biggest Trading Partner surpassing USA in 2004
Trade with China records a surplus considering trade through Hong Kong in 2004
Engine of economic recovery (Orders from China：Iron & Steel, Construction Machinery, Shipbuilding, Automobile, etc.)
Complementation (Japan exports high value-added products and imports low value-added products)
Trade with China prompts industrial restructuring
Industrial hollowing-out and trade conflicts

13. Trade balance with China
($ million)
Direct trade
Trade (including through Hong Kong)
2001
27,014
15,317
2002
21,826
8,224
2003
17,974
1,042
2004
20,832
157
(JETRO)

14. ASEAN Competition for FDI Expansion of trade with China
Share of manufactures: 74% (exports) 86%(imports)
Intra-industry trade (electric machineries)
Smuggling
Low-priced, low-quality Chinese products meet the needs of low income people
Increased FDI from China
FTA with China

15. FDI to ASEAN and China
($ million)
(UNCTAD)

16. ASEAN’s trade with China Value and rate of increase
($ million)
2000
2001
2002
2003
2004
Exports
22,181
23,230
4.7%
31,193
34.3%
47,350
51.8%
62,955
33.0%
Imports
17,334
18,559
7.1%
23,574
27.0%
30,935
31.2%
42,903
35.4%
(China customs)

17. FTA of China 2001 Agreed to establish FTA with ASEAN in 10 years
2003 Signed CEPA with Hong Kong
2004 Started Early Harvest program
2004 Started study of FTA with Republic of Korea
2005 Started tariff reduction from July
2010 Scheduled to establish FTA with ASEAN

18. Importer of Raw Materials
(rate of increase)
2003
2004
Crude oil
55.4%
71.1%
Iron ores
75.4%
161.6%
Copper ores
60.0%
72.6%
Cobalt ores
101.5%
255.2%
Lead ores
139.6%
112.3%
Chromium ores
91.3%
150.6%
(China customs)