People's Republic of China and Its Neighbors: Partners or Competitors for Trade and Investment?
Weiss, John | June 2005
Abstract
The very rapid economic growth of the People’s Republic of China (henceforth PRC), its dramatic success in world export markets and its heavy receipts of foreign direct investment (FDI) have generated much thought and debate in policy and business circles in different parts of the world, but most particularly amongst its neighbors in East and South East Asia. Here we report on research by ADB Institute staff and Visiting Fellows conducted over the last two years that sheds light on these issues. The broad conclusion that emerges is that whilst there may be risks to individual sectors in all countries concerned, the pattern of regional trade and investment that is emerging is mutually beneficial, provided enterprises and governments in PRC’s regional partners respond effectively to the adjustments required. Falling trade costs (import tariffs, transport and freight charges, time in transit, the cost of information and of managing international supply chains) have facilitated rapid regional integration in trade and capital flows within the East-South East Asian region. Added to this, PRC’s rapid expansion provides an opportunity for regional partners to both export to and invest in its large domestic market. However, PRC is also an export rival in third country markets (and a country’s own domestic market) in a range of goods from simple labor-intensive products to the more technologically complex (for the latter principally because of its large FDI sector). If FDI to the region is treated as a fixed sum then higher inflows to PRC will be at the expense of other economies and there will be FDI diversion as an additional possible negative effect that will have consequences for trade flows.
Citation
Weiss, John. 2005. People's Republic of China and Its Neighbors: Partners or Competitors for Trade and Investment?. © Asian Development Bank. http://hdl.handle.net/11540/4055. License: CC BY 3.0 IGO.ISSN
1882-6717
Keywords
Development Economics
Regional Economic Development
Economic Impact
Asian Development Bank
Development
Economic Boom
Regional Economic Integration
Good Governance
Governance Approach
Economic planning
Economic structure
Growth policy
Trade relations
Trade policy
Trade policy
Economic development
Economies in transition
International economy
Border integration
Economic integration
Gross domestic product
Trade policy
Institutional Framework
Public Administration
Business Ethics
Regional economics
Economic forecasting
Economic development projects
Success in business
Business
Free trade
Business
Economics
Communication in economic development
Restraint of trade
International economic integration
Trade blocs
East-West trade
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