Transcript china,in the same boat with the south for industrial

11th session
General Conference of UNIDO
Industrial Development Forum
28 Nov.2005,Vienna
CHINA,IN THE SAME BOAT WITH THE SOUTH
FOR INDUSTRIAL DEVELOPMENT
WU JIA-HUANG
VICE-CHAIRMAN,
CHINA WTO RESEARCH CENTER
Mr.Chairman,
Thank you for providing me the opportunity to
speak on the forum <Industrial Development,
Trade, and Poverty Alleviation through SouthSouth Cooperation> .
With your permission, I would like, first of all,
to speak about the industrial development of
my home country, China.
Importance of Industry
in China’ GDP
Years 1990
37%
Years 2000
43.6%
Years 2004
45.9%
GROWTH RATE OF CHINA’S
INDUSTRIAL SECTOR(2002-2004)
year 2002
10.0%
year 2003
11.8%
year 2004
11.5%
The Chinese Saved 44% of their Income
China’s GDP(2004)
44.2% for
capital
formation
2.8%
Net export
53% for
consumption
Few countries could beat China’s high saving rate.
CONTRIBUTION OF FOREIGN INVESTMENT
FDI TO CHINA
year 2002
52.7(Billion USD)
year 2003
53.5(Billion USD)
year 2004
60.6(Billion USD)
FDI Contributed 27.8% of the total value added in
industrial sector in 2004.
Over half of the FDI was from China’s separate
customs territories.
China’s Experience in Industrial
Development
In my perspective, there are two factors,
which determine China’s fast industrial
development.
One is successful mobilization of domestic
resources through saving.
The other is continuous encouragement of
inflow of FDI.
From Industrial Development to
Trade Expansion
China’s industrial development
is closely related with trade
expansion .
China’s Trade Expansion of
Manufactures
year 2002, by 23% increase
year 2003, by 35% increase
year 2004, by 37% increase
Over 50 percent of the industrial exports
are manufactured by foreign investors.
China’s Trade with the South (2004)
Trade with Africa, grew by 87%
Trade with Latin America, grew by 46%
Trade with ASEAN, grew by 33%
Trade with India, grew by 80%
South-South Trade is not marginalized.
Zero Tariff Approach Towards LDCs
China applies zero tariff rates on
major products originated from
--- 4 LDCs of Asia,
--- 25 LDCs of Africa.
Trade Policy Choice
When acceding to the WTO, China made
a painful but also gainful choice of its
trade policy between
---Encouraging competition, and
---Over-protecting domestic industries.
China’s Tariff Rates Reduced
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
1992
1996
2000
2001
2002
2003
2004
2005
China’s Border Tariff Protection is Lower
Than its Trading Partners
Products
natural resources
China’s
tariff
1.9%
Tariff China
Encounters
3.1%
agric.pro.(primary) 15.5%
23.8%
agric.pro.(processed) 15.4%
24.5%
textiles
12.9%
17.7%
manufactures
6.1%
8.9%
Why China Became a Big Trading
Partner?
Firstly, China is doing its best to lower trade
barriers.
Secondly, China is providing, all possible
facilities to both Chinese and foreign
businessmen, who combine the best world
resources and the cheapest domestic labor,
and make the Chinese products very
competitive in the world market.
China’s Welfare Gains from Growth
of Industry and Trade
The Chinese are earning more,
and living better .
The Chinese are living Better
Per capita income (RMB)
2002
2004
Increase by
urban 7,730yuan 9,421yuan +22%
rural
2,475yuan 2,936yuan +19%
Warning: Per Capita income (2004,rural) was
only one US dollar per day!!
The Chinese are Housed Better
Per Capita Living Space
urban area
25 square meters
rural area
28 square meters
More Revenue Resources
The government revenue are getting
bigger because of more production,
trade and income.
A 15.4% increase was recorded in 2002,
A 14.9% increase was recorded in 2003,
A 21.6% increase was recorded in 2004.
Tariff Reduction Leads to Revenue Loss?
Tariff Revenue accounts for 7.2 percent
of China’s central budget.
Would tariff reduction cause serious loss
of revenue?
Not really, in case of China.
Lower Tariff Rates,
More Customs Revenue
Year
Average Tariff
Tariff Revenue
1992
43.2%
RMB 21.3 billion
1996
23.0%
RMB 30.2 billion
2002
12.0%
RMB 70.4 billion
2003
11.0%
RMB 92.3 billion
2004
10.4%
RMB 104.4 billion
More Expenditure for Social Welfare
Consequently, China has more to expend
on social welfare and pension.
Expenditure on this budget item had
a 39.8% increase in 2002,
a 33.5% increase in 2003, and
a 13% increase in 2004.
Welfare Institutions
Today, China has 87,000 welfare institutions
and enterprises, together with their 2 million
staff members engaged in welfare and relief
activities. In year 2004,
26 million poor people benefited from various
relief programmes.
Another 17 million poor people received
temporary assistance.
Much remains To Be Done In
China On Poverty Alleviation
There are still as many as 60 million
poverty striken Chinese today , to
whom relief is absolutely necessary.
The government is heavily burdened.
Doha Development Round
As Doha Round is named a
“Development Round”, I would like
to speak on two specific items of the
Round related to our Forum,
---Agriculture, and
---Trade facilitation.
Agriculture, A vital Issue
If the trade distorting subsidies are
removed in the “North”, the “South”
farmers would receive welfare gains
as much as US 40 billion annually by
selling their products at a better price.
Small Chinese Farmers
The Chinese Farmers are very small (as
most of the/farmers in the south are ).
They till a piece of land of 0.7 hectare
by average vis-a-vis big American
farmers who own 200 hectares and
European farmers with 20 hectares.
Poorly Protected by Tariff
The Chinese farmers are poorly
protected on the border by a tariff
of 15.8%,
while the American farmers
protected are by 23%,
the European farmers, by 73%.
With Little Domestic Support
China’s domestic support for
farmers is tiny, composing only 1.5%
of farmers’ income.
The US support, composing 18% of
income,
EU support, 33% of income,
Japan’s support, 56% of income.
China Supports G.20
The US, European Union, Japan … ,
they seems unwilling, (or unable?) to
cut down their huge domestic support
and subsidies, for sake of development
of the South.
China and G.20 are in the same boat on
agriculture issue in Doha Round.
Trade Facilitation
Import and export accounts for 70%
of China’s GDP.
Every year the Chinese authorities
have 35 million shipments of goods to
clear at ports for import and export.
Trade facilitation, means a great
deal……
Trade Facilitation has been discussed in
Doha Round. The following is required :
transparency of rules and regulations,
simple documentation,
low service cost,
smooth clearance of goods,
quick SPS inspection ,
efficient co-ordination among various
agencies
Reform in China’s Customs
Some 8 years ago, a reform was
launched on the customs clearance
system in China.
Clearance procedures were cut by half.
Clearance hours were shortened from
96 hours to 48 hours at seaport, and
from 72 hours to 14 hours at airport.
An Electronic Clearance System
is currently experimented in 17
customs in China.
The clearance hours are expected
to cut further by two-thirds in
foreseeable future.
Best Wishes for Doha Round
For trade interest of the South,
for their development concern,
let us hope for the best of the
Doha Round.
Let us work hard together .
Thank you !