China relations with developing countries


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China relations with developing countries

  1. 1. China’s Economic Relations with Developing Countries Barbara Stallings Brown University December 12, 2007
  2. 2. Agenda for Presentation <ul><li>Introduction </li></ul><ul><li>Characteristics of Chinese economy </li></ul><ul><li>Statistical overview of China’s relations with developing countries </li></ul><ul><li>Regional sketches </li></ul><ul><li>Conclusions </li></ul>
  3. 3. Introduction <ul><li>Joint venture with two colleagues </li></ul><ul><li>Importance of topic </li></ul><ul><li>Increased role of China as partner for developing countries in last decade </li></ul><ul><li>Vast differences across regions </li></ul><ul><li>Opportunities and challenges </li></ul>
  4. 4. Five Characteristics of China’s Economy <ul><li>Very high growth in very large economy </li></ul><ul><li>Output structure (dominance of industry) </li></ul><ul><li>Sources of growth (investment, exports) </li></ul><ul><li>Major role of FDI in China </li></ul><ul><li>Changing composition of trade </li></ul><ul><li>Possible changes going forward </li></ul>
  5. 5. Comparative GDP Growth
  6. 6. Exports and Imports (% GDP)
  7. 7. Sources of Growth (Output)
  8. 8. Sources of Growth (Demand)
  9. 9. Foreign Direct Investment
  10. 10. Composition of Trade Exports Imports
  11. 11. China and Developing Economies <ul><li>Main positive contributions </li></ul><ul><li>-- Imports provide markets </li></ul><ul><li>-- Positive price effects </li></ul><ul><li>-- Outward FDI, aid provide funds </li></ul><ul><li>Problematic elements </li></ul><ul><li>-- Exports provide competition </li></ul><ul><li>-- Price effects in reverse </li></ul><ul><li>-- Inward FDI may crowd out others </li></ul>
  12. 12. Chinese Imports by Region
  13. 13. Developing Country Exports to China
  14. 14. China as Source of Growth
  15. 15. China’s Import Characteristics
  16. 16. China’s Inward FDI (Flows)
  17. 17. China’s Outward FDI (Stock)
  18. 18. China and Northeast Asia <ul><li>Most advantageous position; high development; leading role in Asia </li></ul><ul><li>Export capital goods and FDI to China </li></ul><ul><li>Import consumer goods </li></ul><ul><li>Successful, but concerned re future </li></ul><ul><li>Strategies: alter division of labor? global strategy </li></ul>
  19. 19. China and ASEAN (5) <ul><li>Medium development level; also integrated into Asian production </li></ul><ul><li>Most vulnerable group at present: direct competition with China in low- to-medium skill goods and FDI </li></ul><ul><li>Strategy: </li></ul><ul><li>-- Upgrade skills </li></ul><ul><li>-- Speed up ASEAN regional integration </li></ul><ul><li>-- Deepen alliance with Japan </li></ul>
  20. 20. China and Africa <ul><li>Much less developed; blame colonial past; welcome China as new kind of partner </li></ul><ul><li>Export raw materials; import industrial goods </li></ul><ul><li>Investment and aid to support exports </li></ul><ul><li>Many fewer concerns about China, but some worries about domestic industry </li></ul>
  21. 21. China and Latin America <ul><li>Development level similar to ASEAN, but geography, history very different </li></ul><ul><li>Commodity exports to China and industrial imports; fears re both </li></ul><ul><li>FDI: some competition, some inflows </li></ul><ul><li>Strategy options similar to ASEAN </li></ul>
  22. 22. Conclusions (1) <ul><li>China has very different impact across regions because of geography and development level of partners </li></ul><ul><li>Most positive cases: nearby countries that build on dynamic comparative advantage to take part in production chains and complement China on the high end of production </li></ul>
  23. 23. Conclusions (2) <ul><li>Most problematic cases: countries that take part in arms length trade and compete on basis of static comparative advantage (commodities, low-skill goods) </li></ul><ul><li>Policies? We know many of the answers; problem is implementation </li></ul><ul><li>Education and training; investment and technology; infrastructure; finance </li></ul>
  24. 24. Conclusions (3) <ul><li>Possible changes in China’s economy </li></ul><ul><li>Slow-down in growth? </li></ul><ul><li>Greater consumer orientation? </li></ul><ul><li>Impact on developing countries: winners and losers (location, sector) </li></ul><ul><li>Developing countries must seek greater expertise to make strategic decisions </li></ul>
  25. 25. China’s Economic Relations with Developing Countries Barbara Stallings Brown University December 12, 2007