China's WTO Updates
Experts: Increase of China-made Goods No Global Threat

Industrialists and experts from home and overseas said Wednesday that China's growing manufacturing capacity, rather than posing a threat to other economies, will bring much more cheaper consumer goods for overseas businessmen and consumers.

Addressing a seminar on the sidelines of the Shanghai International Industrial Fair, Richard Abrams, a professor from the University of California at Berkeley, said China's increasing manufacturing capacity is only good news for the United States.

Abrams, who cited Chinese manufactured goods as both cheap and good, said that other countries can limit their prices on consumer goods through importing Chinese-made goods, bringing benefits to both businessmen and consumers.

China's contribution to the world will increase with its fast growth in manufacturing industry, he said.

Mo Haoran, chairman of Shanghai DBTEL Industrial Co, said it is “misleading" to consider China's fast and sustained industrial growth as threatening to other economies.

Generally speaking, he noted, China is far from being the global factory many people consider it to be.

His view was also echoed by Lu Zheng, director of the Industrial Economics Institute under the Chinese Academy of Social Sciences.

China's industrial sector is lagging far behind the United States, Japan and Germany in terms of research and development (R&D) capability, the experts said.

China's total R&D investment in the year 2000 was 10.7 billion US dollars, or approximately the amount of the annual R&D investment by the German manufacturing giant Siemens, which stands at about 10 billion US dollars, said the experts.

The United States make up 30 percent and Japan account for 57 percent of the world's top 500 industrial firms, and no single Chinese manufacturing company is strong enough to be included.

Currently, and well into the future, China's exports will be dominated by labor-intensive, rather than technology-intensive products, Lu said.

China has to export 200,000 to 300,000 units of color TV sets to earn enough hard currency for a Boeing passenger plane.

Despite being number one in production of some industrial goods, Mo said, China's export of these products is still small in volume.

Citing as an example, China produces some 150 million tons of steel a year, ranking the first in the world, yet its steel export accounts for only one tenth of its output, less than it imports, Mo said.

The experts said that unlike Japan and the Republic of Korea, Chinese industrial development is mostly driven by domestic demand.

China is one of the leading consumer electronic goods producers in the world, but over half of its rural households have no color TV and more than 70 percent have no refrigerators and washing machines.

China's annual power output ranks the second in the world, yet its per-capita electricity output is less than 1,200 kWh, just eight percent that of the United States.

Statistics available from the World Trade Organization (WTO) show that China had exported 235.8 billion US dollars worth of manufactured goods in 2001, only about 5.3 percent of the world's overall trade of the products, and only half of the export volume of Germany.

Along with its economic growth, China's export volume will increase, but the ratio of export volume to the national economy will drop gradually, the experts noted.

China's export growth will not be motivated by earning hard currencies but by a desire to balance its imports and exports. Therefore, China's expansion of exports means more opportunities for other economies to export their products to China.

Yabuki Susumu, professor of the Faculty of Economics and Business Administration at Yokohama City University, said that the fallacy of the "China Threat" had emerged amid the background of China's improved export competitiveness.

It is a narrow-minded nationalistic point of view to blame the cheap Chinese-made manufactured goods for the poor economic situation, the Japanese scholar said.

He said it is vital to think more about the significance of interdependence and mutual benefit of regional economic cooperation in the circumstances of economic globalization, not to talk about the so-called threat of China.

Political figures from Japan and a growing number of economists from other countries have reiterated time and again over the past year that China's fast economic growth constitutes no threat to other economies.

The so-called "China threat" fallacy first emerged in Japan, assist economy stagnated in the past decade, while China's manufacturing capacity increased thanks to soaring overseas investment in the country.

(Xinhua News Agency November 7, 2002)


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