China

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Chinas Business Relations with Australia and
Pakistan
Prof. Andrew (Guo-An) Wang ???

• Department of International Trade
• Zhejiang Gongshang University, China
• http//econet.zjgsu.edu.cn/andrew.wang/
• MSNwangguoanhz_at_hotmail.com 
• Skypewangguoan2006 QQ114841804
• http//econet.zjgsu.edu.cn/andrew.wangE-mail
  wangguoan_at_zjgsu.edu.cn

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Contents

• Chinas economic growth
• Chinas trade relations with its partners
• Chinas trade relations with Australia and
  Pakistan
• Sources of trade frictions with its partners
• References/Useful websites

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I. Chinas economic growth

• Fastest growing economy, annual growth rate of
  about 10 since1978.
• GDPUS7.5trillion in 2011, No.2 economic power
  since 2010. It is expected to surpass USA in
  2019. But its GDP per capita is 4,283 (in 2010),
  only 12 of Japans and 10 of USAs, ranking
  95th in the world.

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I. Chinas economic growth

• No. 2 largest trading nation in the world, its
  trade volume amounted to US3.6 trillion in 2011.
• Largest exporter and second largest importer.
• Largest foreign exchange reserves US 3.18
  trillion in 2011.

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I. Chinas economic growth

• Largest consumer of natural resources, increasing
  at the rate of 8.9 in the last 10 years.
• Second largest financial revenue in the world,
  but Chinas medical expenditure accounts for only
  1.2 of its GDP. Most of the farming population
  have no medical or social insurance.
• Biggest FDI recipient among developing countries
  in the last two decades.

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I. Chinas economic growth

• Chinas outbound FDI increased to over US 60
  billion in 2011, the fifth outbound Foreign
  Direct Investor in the world.
• Increasing focus on company acquisition in
  developed countries.

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I. Chinas economic growth

• Largest manufacturer in the world after USA was
  the largest for 110 years, but most of the
  foreign companies R D and marketing centers
  are in developed countries, such in USA, EU and
  Japan. Chinese workers are paid only a very low
  salary and are exploited and its environment
  polluted and natural resources exhausted.

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I. Chinas economic growth

• The economic miracle in China in the last 33
  years, but it is made by the world. China is only
  a small shareholder in the economic miracle, most
  of the profits have gone to the transnational
  companies from developed countries. Foreign
  companies in China have contributed a lot to
  Chinas GDP. Many products have been made in
  China, but few have been designed or created or
  invented in China.

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II. Chinas trade relations with its partners

• FTA with Chile, ASEAN, Pakistan, New Zealand,
  Singapore, Peru and Costa Rica.
• CEPA (Closer Economic Partnership Arrangement)
  with Hong Kong and Macau ECFA(Economic
  Cooperation Framework Agreement) with Taiwan.

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II. Chinas trade relations with its partners

• Biggest trading partner of most of Asian
  countries and most of the economic powers.
• Ten major trade partners in 2008 EU,USA, Japan,
  Hong Kong, S. Korea, Taiwan, Australia,
  Russia and India. Its trade volume with them
  amounted to US1944.5 billion, accounting for
  75.9 of its total trade.

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China's top trade partners 2009 (US billion)
Source PRC General Administration of Customs,
China's Customs Statistics

• Rank Country/region Volume
• United States 298.3
• Japan 228.9
• Hong Kong 174.9
• South Korea 156.2
• Taiwan 106.2
• Germany 105.7
• Australia 60.1
• Malaysia 52.0
• Singapore 47.9
• India 43.4

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China's top trade partners 2010 (US billion)
Source PRC General Administration of Customs,
China's Customs Statistics

• Taiwan
• Brazil
• Hong Kong
• South Korea
• USA
• Japan
• Australia
• EU
• Russia
• India

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III. Sino-Australia trade relations
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III. Sino-Australia trade relations

• Established formal diplomatic relations in1972
  when bilateral trade volume amounted to only
  US72 million, increased to US6.3 billion in
  1999.
• Since China joined the World Trade Organization
  (WTO), Sino-Australian trade volume has shot up.
• China has become Australias largest trading
  partner since 2009.
• 2008-2009 bilateral trade volume reached nearly
  US60 billion, 36.27 higher than the previous
  year.
• Over 66 of Australias total exports to China
  originate from Western Australia.

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III. Sino-Australia Trade Volume
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III. Sino-Australia trade relations

• Trade deficit with Australia 18.8 billion in
  2009
• Main imports from Australia minerals, base
  metals and related products, textile materials
• Main exports to Australia mechanical and
  electronic products, textiles, furniture and toys
• Australia is Chinas eighth biggest trade
  partner.
• The Sino-Australian free trade talks began in
  April 2005 and 13 rounds of talks have been
  conducted. In April 2008, Australian former Prime
  Minister Kevin Rudd visited China and agreed to
  restart free trade talks.

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Western Australia is BIG
WAs population of 2.2 million people live across
an area three times as big as Texas Perth is
the western gateway to Australia
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Perth Statistics

• Perth, Western Australia is Australias strongest
  economy.
• 10 of Australias population
• 22 of Australias jobs
• 35 of Australias GDP
• 40 of Australias Exports

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Perth Statistics

• Perth, Western Australia is Australias strongest
  economy.
• WA exports to China in 2010 reached A41billion,
  accounting for 40 of WA exports and 70 of
  Australian exports to China. 
• WA exports to China grew from A4 billion in 2002
  to A41 billion in 2010.

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IV. Sino-Pakistan trade relations

• China and Pakistan established their diplomatic
  relations on May 21, 1951.
• The stable relationship has set a good model in
  the world diplomatic history over the past 60
  years.

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Friends in need are friends indeed

• Pakistans all reserved tents and emergency
  assistance to China after 8.0-magnitude Wenchuan
  earthquake in Sichuan Province in 2008, and all
  its transport planes and all its reserved tents
  to Chinas southern parts during its fight
  against the severe floods in 2009
• Pakistans generous immediate aid to the
  earthquake-struck Yushu country in Qinghai, China.

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Friends in need are friends indeed

• Chinas aid to Pakistan has created many records
  in the history of Chinas aid to and relief work
  in other countries, such as the largest-ever
  humanitarian aid (US250 million), first medical
  relief team abroad, first use of military
  helicopters, first fleet of 101 trucks loaded
  with daily necessities to travel by land during
  Pakistans battle against its flood in 2010.

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Friends in need are friends indeed

• Chinas full recognition of and support to
  Pakistans effort in combating terrorism.
• Pakistans strong support to China on issues of
  Taiwan, Tibet, Xinjiang (East Turkistan) and
  human rights and in Chinas battle against
  terrorism, separatism and extremism on the
  international stage.
• In brief, we are all-weather strategic
  partners, good neighbors, good friends and good
  brothers.

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IV. Sino-Pakistan trade relations

• The bilateral trade volume amounted to only US
  580 million in 1990 and the number stayed around
  US 1 billion in the 1990s.
• Since China joined the World Trade Organization
  (WTO), Sino-Pakistan trade volume has shot up.
• China is the fourth trade partner, the second
  import original place and the seventh export
  market of Pakistan.
• The bilateral trade volume amounted to US6.98
  billion in 2008. Affected by the global financial
  crisis, the bilateral trade volume of 2009
  dropped a little, but still amounted to US 6.67
  billion.

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IV. Sino-Pakistan Trade Volume
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IV. Sino-Pakistan trade relations

• Trade deficit of Pakistan with China 4.389
  billion in 2009
• Chinas main exports to Pakistan include
  high-tech products, chemical products, plastic
  products and home appliances, etc.
• Pakistans main exports to China are cotton,
  textiles, leather and aquatic products, etc.

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IV. Sino-Pakistan trade relations

• China-Pakistan Free Trade Agreement (CPFTA) was
  signed on 24th November 2006 and took effect on
  July 1, 2007. China-Pakistan Agreement on Trade
  in Services was signed and took effect on 21st
  February 2009 and took effect on October 10,
  2009.
• The bilateral trade volume with Pakistan would
  soar to US15 billion by 2015.

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Barriers to Sino-Pakistan economic cooperation

• 1. The unstable and risk zones in Pakistan have
  undoubtedly made some of the Chinese managers
  reluctant to invest in Pakistan. Suicide attacks
  and bombing have killed 4,000 people across
  Pakistan in recent years according to AFP.
• 2. Pakistans infrastructure in transportation,
  communication, energy supply, education has much
  room for improvement.

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Barriers to Sino-Pakistan economic cooperation

• 3. Compared with the wide range of imports from
  China, the number of products from Pakistan for
  exportation to China is limited. Therefore
  Pakistan maintains a growing trade deficit with
  China, which is a concern for both sides.
• 4. In the Chinese market, the enterprises from
  Pakistan are not as aggressive and active as
  their counterparts from other Asian countries.

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Barriers to Sino-Pakistan economic cooperation

• 5. Pakistan focuses its attention to bringing in
  technology and attracting the investment from
  China and reduction of the trade deficit while
  Chinese enterprises tend to focus on the
  expansion of their market and the exploitation of
  the natural resources in Pakistan. The
  difference of both sides objectives can lead to
  the slow pace of cooperation, unreasonable
  economic structures, the constrained cooperation
  scale.

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Barriers to Sino-Pakistan economic cooperation

• 6. The Sino-Pakistan cultural differences have
  made it difficult for both sides to deepen
  economic cooperation. We have to enhance
  communication between the young generation of the
  two countries.

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Favorable conditions for widening Sino-Pakistan
economic cooperation

• 1. Increasingly strengthened political ties and
  all weather strategic partnership.
• 2. Complementary economic structures
• Chinas strong relationship with Pakistan
  is conducive to its food and energy security,
  maintenance of its economic and trade
  relationship with the countries in the Gulf
  region and consolidation of its economic presence
  in Asia.

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Favorable conditions for widening Sino-Pakistan
economic cooperation

• 3. Both sides need each other in its economic
  development. Pakistan needs FDI to rebuild its
  infrastructure severely damaged by its natural
  disasters and terrorist attacks.
• 4. Need to keep power balance in regional peace
  and development in South Asia.

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Favorable conditions for widening Sino-Pakistan
economic cooperation

• 5. Geographical proximity/closeness
• 6. Institutional guarantee by FTA
• The establishment of the China-Pakistan free
• trade area can boost both sides productivity and
• deepen the cooperation level and broaden
• cooperation scale. The China-Pakistan Business
• Summit offers a good opportunity to the two sides
• to deepen our collaboration in all sectors.
• 7. Pakistans very attractive FDI policies

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Promising Sino-Pakistan economic cooperation

• Agreements and trade deals formalized by
  business leaders and cabinet ministers during
  Chinese Premier Wens amounted to 35 billion
  (AFP). On 19th December 2010, Tariq Puri, the
  chief executive officer from Pakistan Trade
  Development Authority Of Pakistan (TDAP)
  announced that the bilateral trade volume between
  China and Pakistan would soar to US10 billion in
  the next two years and would amount to US15
  billion by 2015.

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Promising Sino-Pakistan economic cooperation

• Chinas Ministry of Commerce has vowed to
  increase the bilateral trade volume to US15
  billion by 2015,too. Mr. Masood Khan, Pakistani
  ambassador to China said that Sino-Pakistan trade
  volume is likely to increase to US18 billion in
  less five years.

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V. Sources of trade frictions

• Foreign trade surplus value
• USA USD101.9 billion 2005, USD177.47 billion
  in 2006, 256 billion in 2007, 227 billion in
  2009, US183.1 billion in 2010.
• Since 1997, the trade between China and USA
  has grown 12.5 per year and more than one
  quarter of Chinese exports are sold to USA. But
  60 of Chinese-made products are made by US
  companies in China.

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V. Sources of trade friction

• Antidumping duties against Chinese products
• Exchange rate between the Chinese currency RMB
  yuan and other major currencies, such as US and
  Japanese yen
• Technical barriers to Chinese products health
  and sanitary regulation, packaging and labeling
  regulation
• Technical standards (e.g. ISO9000-9004/GB/T19000
  ISO14000 environment ISO18000,safety.)

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V. Sources of trade friction

• Special Safeguard (export quantity) measures
• Intellectual Property Rights violations and
  protection During the 11th Five-Year Plan period
  (2006-2010), a total of 265,000 cases concerning
  trademark violations had been investigated, an
  annual average of 53,000 cases. China
  investigated 56,000 trademark rights infringement
  cases in 2010, an increase of 9.78 percent year
  on year
• Human rights
• Competition for natural resources

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VI. References / Useful websites

• For more information about Chinas foreign trade,
  please visit
• http//www.stats.gov.cn/english/statisticaldata
• http//english.mofcom.gov.cn/
• http//english.customs.gov.cn/
• http//www.cantonfair.org.cn/en/
• http//en.expo2010.cn/
• www.alibaba.com

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Any questions?

• Thank you for your attention.
• Professor Guo An (Andrew) Wang
• Dept. of International Trade
• Zhejiang Gongshang University, China
• E-mailwangguoan_at_zjgsu.edu.cn
• Mobile[phone]