For the past 25
years China has experienced extraordinary economic growth. After
years of state control, the government of China introduced a
major program of economic reform in the late 1970s. It
encouraged the formation of private businesses, liberalized
foreign trade and investment, relaxed state control over prices,
and invested in industrial production and the education of its
workforce. Twenty-five years later, this strategy, by most
accounts, has been a tremendous success. Since 1980, China’s
real GDP has increased at an annual rate of more than 9%, and in
1994 China became the world’s second largest economy. At $6.14
trillion, China’s GDP now accounts for 12.7% of total world
output. If historical GDP growth rates continue, China may
surpass the US to become the world’s largest economy in
approximately eight years.
|
| Economic Growth: China and The
World |
|
 |
| International
Monetary Fund |
|
|
|
|
|
What differentiates China from other developing countries
that have preceded it is the sheer size of its population.
Half of China’s nearly 1.3 billion people still work in
subsistence agriculture, representing a seemingly
inexhaustible supply of inexpensive labour. Equally important
has been China's ability to attract the capital and
technology required to harness that labour. Last year, China
became the largest recipient of foreign direct investment in
the world. These factors, combined with a
low valued fixed exchange rate regime, give China a considerable
competitive advantage in the production and export of
manufactured goods. As a result, China has experienced exploding
trade with both imports and exports increasing an average of 14%
per year over the past two decades. The speed at which
‘made-in-China’ products have come to dominate many sales
categories is tremendous.
In the last 10 years, Canadian exports to China have
increased by 146% and imports from China have quadrupled.
Newfoundland and Labrador imports from China have increased only
marginally, from just under $398,000 in 1993 to just under
$853,000 in 2002. However, this may reflect the fact that many
consumer goods that enter the province are transshipped through
other provinces rather than directly from China. Exports from
Newfoundland and Labrador to China have experienced a
significant increase, from just under $7.5 million in 1993 to
over $175 million in 2002; the strongest growth of all Canadian
provinces. The top four Newfoundland and Labrador exports to
China are shrimp and prawns ($69.1 million), crab ($58.1
million), iron ore and concentrate ($33.0 million), and other
fish and fish products ($14.4 million). These four categories
combined accounted for essentially all provincial exports to
China in 2002. During the first eight months of 2003, exports to
China were up an additional 38% over the same period in the
previous year.
With China’s entrance into the World Trade Organization in
2001, the country will experience further integration into the
global economy. As the last remnants of quota protection against
China are gradually removed, consumers will enjoy lower prices
and competitors will find it increasingly difficult to match
China’s tremendous cost advantages. However, integrating local
products into China’s supply chain may create considerable
opportunity for domestic exporters.
|
|
