The Hindu : Business : China's pre-eminence in exports

Online edition of India's National Newspaper
Monday, Apr 18, 2005

Business

Business

China's pre-eminence in exports

Chinese goods are widely popular due to their lower prices

There is speculation in financial markets about prospects of China revaluing its currency

TODAY MANY eyebrows have been raised in financial, and commercial markets as World Trade Organisation (WTO) states that China has overtaken Japan as the world's third largest exporter after the U.S. and Germany.

The U.S., German and Japanese export performance has slackened due to recessionary trading conditions in the global market place. However, China has dramatically improved its performance by boosting exports in electronics hardware and electrical goods, which alone account for a third of China's exports. It is also a key sector for other East Asian exporting giants like Singapore, Taiwan, Malaysia, South Korea and the Philippines. Often rated as the "five economic tigers, European Union and the U.S. should be aware of."

According to European observers they will continue to pose a `credible challenge' for China, Japan, the European Union and the U.S.

According to WTO, in dollar terms, world trade in goods rose by 21 per cent to $8,880 billion in 2004, which is rated as the biggest increase in a quarter century.

Chinese exports rose by 15-17 per cent last year. Hence, China now emerges as the biggest merchandise trader in Asia and third largest in the world after the U.S. and Germany, both for exports and imports. China's insatiable appetite for raw materials and energy also makes it a key driver for the world trade growth. China is also seen making bold inroads in major African and South American markets and apart from being a key importer of raw materials, Chinese manufactured goods are widely popular due to their lower prices and high manufacturing standards.

China is also engaged in major construction, engineering and rail building programmers in this region, where China is often seen blazing a new trail.

America's fast escalating and financially embarrassing trade deficits of $700 billion plus — and China accounts for nearly a third of that — has triggered much speculation in financial markets about prospects of China revaluing its currency, which is pegged at "an attractive but unrealistically lower rate" making Chinese products and survives even more competitive in global export markets.

China's decision not to send top officials to Group of Seven finance ministers this weekend has again triggered fresh speculation about a possible revaluation of yuan against the dollar. The conclusion in financial markets today is that yuan revaluation in the near future is `no sure thing'.

The geo-political balance of power and influence in Asia, with the advent of China on the global economic scene is changing so fast that current judgments on regional policies risk being outdated as soon as they are made.

The current diplomatic fracas between Japan and China over the recently published Japanese history text books have yet to be resolved and how it will affect the two Asian giants' trading, financial and investment relationship remains to be seen.

There is also much speculation in the European media about parameters of newly found `strategic partnership' between India and China to cover both Asian giant's bilateral trading and investment relationship. China's investment flows, exports and imports are at a record high and nearly six times bigger than India's.

BATUK GATHANI

in London

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