A Report on the conference

East-West Center Observer, Summer 2004

Economists: China’s Export Surge Will Stimulate Other Asian Economies

China’s massive surge in exports to East Asia, Europe and the United States is more likely to stimulate rather than stifle other Asian economies, according to economists who gathered at an international conference in Beijing, June 18-19.

The topic dominated discussion among 65 trade economists at “China, WTO and the Asian Economies,” at Renmin University, organized by the East-West Center and the Research Center for International Economics at the University of Washington.

In the keynote address, Min Tang, chief economist for the Asian Development Bank’s Resident Mission to China, said the recent surge in exports from China to the United States and the European Union will benefit developing countries in Asia. Beijing’s efforts to form a regional free-trade area with the Association of Southeast Asian Nations (ASEAN) and to increase regional integration within Central Asia and the Mekong Delta area will provide more opportunities than competition for other developing Asian countries.

Sumner La Croix, an EWC analyst and University of Hawai‘i professor, and other speakers at the conference echoed this theme. Japan, Hong Kong, Singapore, Thailand and Malaysia economies grew by exporting to the United States and Europe in the 1970s and 1980s, and their growth during this period did not hurt their Asian neighbors, La Croix said.

“Similar rapid income and export growth from China today is much more likely to stimulate rather than stifle growth in China’s neighbors,” La Croix said.

Kar-yiu Wong, director of the Research Center for International Economics at the University of Washington, noted that China and ASEAN countries do not compete directly on as many product lines as commonly assumed.

EWC China specialist Tianshu Chu added that China’s export expansion is also likely to be slowed by the surge of anti-dumping actions filed against China by developing and developed countries.

Other topics discussed included the fixed exchange rate between the U.S. dollar and China’s currency, the yuan. Conference participants were skeptical that floating the yuan would improve the huge U.S. trade deficit with China due to the extensive trade in component parts that currently comprises a large portion of the two countries’ trade.

La Croix said the yuan must appreciate in the medium run. But in the short term, he cautioned, an appreciation of the yuan could be very risky for China’s economy due to extensive balance sheet problems faced by its four major banks.