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Manufacturers, Exporters, Wholesalers - Global trade starts here.
World's Largest Exporter Still a Dream

In its first Economic Survey of China issued last Friday, the OECD said China could overtake the United States and Germany to become the world's largest exporter by 2010.

Most Chinese enterprises could not be more exited about the prospect of their goods and services soaring from 6 percent of global trade at present to 10 percent in the next five years. As domestic demand remains hard to boost, exports have become an increasingly important growth engine for Chinese firms.

However, intensifying trade disputes between China and rich nations, and creeping protectionism from the latter, are bad omens for domestic producers.

The latest trouble Chinese exporters have faced was reported on Monday when the European Union decided to impose definitive five-year anti-dumping levies of up to 56.2 percent on imports of Chinese polyester filament textiles.

The news came almost at the same time as Bo Xilai, China's commerce minister, expounded to the public a burden-sharing agreement he signed early this month with his EU counterpart. That deal was meant to help save the hold-up of Chinese textile exports at EU borders from escalating into a disaster for European importers and retailers.

Bo tried hard to persuade domestic producers as well as the public that the new quota pact would not affect the nation's exports, and should improve conditions for China's exporters to the EU.

But Chinese exporters had hardly digested the news before another battle loomed on the horizon.

The trade dispute over the EU's imports of Chinese polyester filament textiles will likely prove to be difficult to resolve.

In contrast to the sincerity and flexibility the Chinese side demonstrates in trade negotiations with rich nations, the ever-rising tides of protectionist measures developed countries are adopting cast doubt on their long-term advocacy of free trade.

The report the OECD (Organization for Economic Co-operation and Development) issued on China is focused on the careful examination of both the strengths and challenges for the Chinese economy.

China's current pace of economic growth averaging more than 9 percent annually over the past two decades and quickly expanding trade volume since its entry into the World Trade Organization convincingly point to a further rise of China's status in global trade.

Yet, while analyzing many key domestic challenges China has to meet to sustain its growth, the OECD report has perhaps gone a little far by predicting the nation could become the world's largest exporter by ignoring the adverse trade environment the country is operating in.

The economic competitiveness of China, the world's most populous nation, largely rests on the huge potential of its domestic market and its comparative advantage as a global manufacturing center.

If the country is to maintain its economic dynamism in coming years, progress must be achieved in trying to overcome obstacles.

One self-evident challenge for the global economy is how to adapt to the massive move of multinationals' manufacturing capacity to China and the resulting soaring exports.

Businesses from rich nations have invested heavily in China to cut manufacturing costs but their governments have not seemed prepared to accept the consequent growth of Chinese exports.

A surge of imports certainly exerts undesirable pressure on domestic industries. The solution, in terms of free trade, is to undertake painful but necessary industrial restructuring.

Nevertheless, developed countries' preference for protective measures over domestic reforms indicates the odds of China's trade environment being adequately improved are slim. Clearly that is not a problem China alone can fix.

(China Daily September 22, 2005)


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