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Who Believes the New "China Threat Theory"?
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Over the past week, a so-called UN report titled "China's Boom is a Threat to Neighbors" was widely disseminated under the accusations of some overseas media such as the Wall Street Journal and Kyodo News. Under the exaggeration of some foreign media, the "China threat theory" may rise again.

In comparison with the old version, the new "China threat theory" has not only advocated the great potential threat China may be to the United States, Japan and other developed countries, but also targeted to China's neighboring countries. It claimed that the price of Chinese products are unfairly and artificially low and are severely damaging to the economies of those poor countries that are heavily dependent on primary industries.

In this so-called "UN Report", China's rapid economic development has fueled a "sin".

Under the framework of economic globalization, it is simply a fact that China will compete with some of its neighboring countries and regions in trade. Since China has similar export product structure with its neighboring countries, direct competition can hardly be avoided. Under the general regulation of capital flows, capital is always moving towards the best place with the highest profit in return. Investors will always choose the regions with higher enterprise quality, better environment and more preferential policies as long as they can have the price of labor guaranteed. However, the key point here is that no one can simply attribute the unsuccessful economic development of a single country to the development of other countries. Small and medium-sized countries are easily marginalized in the globalization movement. It is not an issue that can be explained clearly in a few words.

Second, China's growing economic strength played a leading and protecting role in the economic development of its neighboring countries and regions. Statistics reflect the truth. According to Agence France-Presse (AFP), from 1990 to 2003, the average annual economic growth rate in the Asia-Pacific region is 7.6%, among which the growth rate of South and Central Asia reached 5.4%, much higher than the 2.7% of the Latin America and the 3.2% of the Middle East. The Asian region is in an orbit of rapid economic growth.

Latest statistics issued by Ministry of Commerce website show that the trade volume of both China and many countries around China are increasing rapidly. The trade deficit between Thailand, Indonesia and China has been greatly narrowed, demonstrating a win-win situation. This year, the growth rate of the textile industry of Bangladesh has already exceeded that of China. The complaints accusing China of stealing some small orders from other countries are simply not true.

As a matter of fact, China is offering more aid and assistance to many other Asian countries and regions. To help the development of other countries and regions, China established an International Anti-poverty Center in May 2005. The center, cooperating with the United Nations, started to provide training to more than 3,000 officials from Africa and other areas at the beginning of this year.

The United States and some European countries have criticized the rapid development of China as having increased the demand for materials leading to rising prices of raw material. Chinese products with higher prices being exported into many countries, especially developed countries, as a result, have exacerbated the inflation in these countries. However what is contradictory is that these developed countries also criticized China for unfairly low prices of exports products. The influx of low-cost Chinese products has caused a strong negative impact on her neighboring countries, which means that China's exports have led to deflation in these neighboring countries.

Does China really have such a great ability to transmit inflation to developed countries and deflation to underdeveloped countries? Indeed, the theory is simply a reflection of economic hegemony. Some worry that China's growing economic strength will present a threat to their own international economic status, and therefore hold double-standards with regards to China trying to sow discord between China and its neighboring countries. At the same time, the argument of the "serious under-evaluation of the RMB exchange rate" has taken advantage of the crisis to fan the flames. However, if the RMB appreciates, would the price of Chinese products soar? Would its impact on developed and under-developed countries become even greater? People can not help thinking: If one wishes to condemn, he can always make false accusations.

(People's Daily Online July 10, 2006)


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