 Since
the beginning of the Chinese reform process in the
late 1970s, China’s foreign trade has developed
from an insignificant amount to almost 1.5 trillion
USD in 2005. Especially the accession to the WTO
in 2001 has propelled foreign trade to contribute
more than 60% to China’s GDP.
So what about the concerns that were voiced before
China’s move to join the WTO? Did China’s
agriculture suffer from a rapid expansion of cheap
imports? Did China’s car industry suffer from
its lack of competitiveness once the import tariffs
were reduced? Did the financial sector collapse
under the weight of international competition?
The famous Chinese economist Prof. Mao Yushi gave
answers to these questions in a forum organized
by the Malaysian Chinese Association (MCA-Beliawanis)
and the Friedrich Naumann Foundation on September
15 in Kuala Lumpur.
According to Prof. Mao, the financial sector is
still the weak link of the Chinese economy. However,
China did not suffer any of the predicted consequences
of its unilateral trade concessions to the WTO.
On the contrary, competition by the international
car industry has led to significant cost reduction
and a growth in competitiveness of the national
industry. Meanwhile, the national agriculture produced
a strong surplus, which led to reduced Chinese prices
while the international prices went up. This prevented
the feared surge in cheap imports.
Within the trade balance of Malaysia and China,
Malaysia has continuously enlarged its surplus to
10.1 billion USD in 2004. This was mainly due to
a surge in Malaysian exports to China from 470 million
USD in 1990 to 18.1 billion USD in 2004. This amounts
to an annual 30% growth of Malaysian exports to
China, which mainly consist of capital-intensive
goods. Malaysia hence also strongly benefited from
the openness of the Chinese economy.
Prof Mao is a co-founder and Chairman of the Unirule
Institute of Economics, which is an
independent think tank in Beijing/China. In November
2004 he was elected by the International Business
Review as one of the ten most influential economists
in China. His research area concerns institutional
economics, energy and environmental economics, transportation,
policies on economic reform and poverty alleviation.
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