BEIJING (June 21) -— China's massive surge in exports to East Asia, Europe and the United states is more likely to stimulate, not stifle other Asian economies, according to economists meeting in Beijing.
The topic dominated discussion among 65 trade economists at an international conference titled "China, WTO, and the Asian Economies." The conference was hosted June 18-19 by Renmin University in Beijing and organized by the East-West Center in Honolulu and the Research Center for International Economics at the University of Washington.
In the keynote address, Min Tang, chief economist for the Asian Development Bank's Resident Mission to China, said the recent surge in exports from China to the United States and the European Union would benefit other developing countries in Asia. Efforts in Beijing to form a regional free-trade area with the 10 members of the Association of Southeast Asian Nations (ASEAN) and to increase regional integration within Central Asia and the Mekong Delta region would help to ensure that China's export growth provides more opportunities than competition for other developing Asian countries.
Other speakers at the conference echoed this theme. Sumner La Croix, an East-West Center senior research fellow and University of Hawaii professor, said Japan, Hong Kong, Singapore, Thailand and Malaysia had grown by exporting to the United States and Europe in the 1970s and 1980s and that their growth during this period had not hurt their Asian neighbors.
"Similar rapid income and export growth from China today is much more likely to stimulate rather than stifle growth in China's neighbors," La Croix said.
Kar-yiu Wong, director of the Research Center for International Economics at the University of Washington, noted that China and the ASEAN countries do not compete directly on as many product lines as commonly assumed.
Tianshu Chu, an East-West Center research fellow, added that China's export expansion is also likely to be slowed by the surge of anti-dumping actions filed against China by developing and developed countries.
Regarding the loss of exports in other countries due to China's growth, Wing Thye Woo, University of California-Davis economics professor, said exports from China would divert trade away from ASEAN countries, but he added that these countries also had the necessary policy tools to offset most of the negative effects from this diversion.
Sweta Szena, public policy professor at the University of Pittsburgh, presented a simulation model that showed China's exports of textiles and other labor-intensive goods could drive Indian exports of certain goods out of the U.S. and E.U. markets. However, this assumed India would not engage in additional economic reforms. If India did indeed adopt new market-oriented reforms, Szena said India had the potential to remain competitive in these markets.
Other topics under discussion included the fixed exchange rate between the dollar and China's currency, the yuan. Conference participants were skeptical that floating the yuan would improve the huge U.S. trade deficit with China due to the extensive trade in component parts that now takes up a large portion of the two countries' trade.
La Croix said the yuan must appreciate in the medium run. But in the short term an appreciation of the yuan could be very risky for China's economy due to the extensive balance sheet problems faced by its four major banks.
For more information on the conference and speakers, contact Sumner La Croix at the East-West Center at (808) 944-7508 or lacroixs@eastwestcenter.org