Chinas Future Development and Economic Relations with Asia and Latin America

1
Chinas Future Development and Economic Relations
with Asia and Latin America

• Justin Yifu Lin
• Peking University and
• Hong Kong University of Science Technology

2
Chinas Growth Potential

• The current stage of Chinas growth is about that
  of Japan in 1960. Table 1.doc

3
GDP per Capita, 1950-1992
4
The FDI to Developing Countries
5
Is Chinas Labor Cost Low?

• Chinas wage rate is about 1/50 of that in U.S.
  and Japan
• Labor productivity is only 1/25 of U.S. and 1/26
  of Japan
• US wage level is only 1/3 higher than China per
  dollar output

6
Share and Domestic Value Added of Processed
Exports
7
Chinas Trade Balance, 1980-2003
8
Chinas Trade Balances

• The pattern of Chinas trade balance changed
  around 1992.Table 3.doc

9
Sources of FDI to China

• The changes in trade pattern is related to the
  relocation of labor-intensive manufacturing
  industries from East Asia to China through FDI.
  Table 4.doc

10
Concluding Remarks (1)

• China has the potential to maintain dynamic
  growth in the coming decades
• To realize the growth potential, China needs to
  complete the transition to market economy
• WTO accession will facilitate Chinas transition
  to market economy
• China will continue to attract large inflow of
  FDI. However, the same will be true to other
  developing countries.

11
Concluding Remarks (2)

• More than half of Chinas exports is processed
  manufacturing goods.
• The more is China export, the more Chinas import
  of intermediate products from Asia.
• The dynamic growth in GDP and trade will increase
  Chinas import of natural resources from natural
  resources rich countries in Asia Pacific and
  Latin American countries