A survey produced by the United Nations Economic and Social
Commission for Asia and the Pacific (UNESCAP) has said that while
China has often been criticised for its trade surplus, its
low-priced exports have actually helped hold down world
inflation.
Between 2001 and 2005, the country's exports helped reduce the
annual inflation rate in the United States by 0.28 percentage
points, in the European Union by 0.37 percentage points, and in
Japan by 0.65 percentage points, the UNESCAP economic and social
survey of Asia and the Pacific, which was released on Wednesday,
said.
China is now responsible for about 90 percent of the world's toy
exports, 50 percent of its apparel exports and 16 percent of its
exports of consumer electronics.
In addition, its purchase of US assets helped reduce US interest
rates by about 0.15 percentage points during the period, the survey
said.
However, the survey said that China's imports in the energy
sector has pushed up world inflation by increasing commodity
prices. Its huge demand for oil, for example, contributed to a
22.5-percent increase in the world oil price between 2001 and
2005.
In total, China's imports of energy resources helped boost the
annual inflation rate in the US by 0.23 percentage points, in the
EU by 0.35 percentage points, and in India by 1.11 percentage
points, over the period 2001 to 2005.
The country accounts for 45 percent of the world's cement
imports and 20 percent of its aluminium and copper imports.
It is also now ranked as the world's third largest trader,
having experienced a sevenfold increase in trade since 1990.
While China's labor-intensive manufacturing processes pose a
serious export challenge to countries with similar production
methods in the region, the survey said that there remain
wide-ranging opportunities for Asian and Pacific countries to
export technology-intensive intermediate products to China.
"High and middle-income regional economies have great
opportunities to export to China. The highest overlap is for Japan,
the Republic of Korea and Singapore, followed by the middle-income
ASEAN economies of Thailand and Malaysia," the survey said.
Based on purchasing power parity, the survey ranked China as the
world's second largest economy and estimated its economic growth
last year contributed one-third of the world total.
However, the survey said that China's GDP growth might decrease
to 9.9 percent this year, with exports and export-based investments
being the major driving forces.
However, the further appreciation of the yuan and weak
electronic demand would reduce exports, while a tighter domestic
policy would slow investment, the survey said.
The survey also warned that China's growth relies excessively on
exports and export-related investments, while private consumption
had declined to a record low.
Domestic consumption accounted for 60 percent of GDP between
1990 and 1996 and 52 percent in 2005, 27 percent lower than the
world average.
To boost these figures, UNESCAP said the central government
should encourage people to reduce their precautionary savings by
investing more in education, pensions and healthcare. It should
also try to increase consumer borrowing.
However, Wang Huijiong, an expert with the development research
center under the State Council, said that the country currently
lacks a mature fiscal and financial system that would ensure the
sound management of consumer borrowing.
He said that bringing personal income in line with GDP growth,
especially for people in rural areas, would provide the most
effective solution to falling domestic consumption.
(China Daily April 20, 2007)