The Past and Future Role of China in

Global and Regional Economy: A

Trade Perspective

DING,Yibing

(October 20, 2015 Buenos Aires)

 Contents
1. Introduction
2. From Following Goose to Regional Export
Platform
3. From Export Platform to Market Provider
4. The Belt and Road and Chinas Future Role
in Global Economy
5. Potentials and Challenges
1. Introduction
 Since the beginning of its economic
reforms, China has become more and
more engaged in economic globalisation
and has become deeply integrated with
Asia and the whole world.
 China's role has changed a lot as part of
the process of its economic integration
with the regional and global economy as a
whole, and will continue to change in the
future. In the past three decades China
progressed from following the Japan-led
Asian flying geese paradigm to becom
the main export platform of the whole
region. It then began to absorb more
diversified products produced in the region
 As China became a upper-middle income
country in 2010, new challenges emerged
and both China's economic New Normal
and its emphasis on the Belt and Road
Initiative revealed that there would be
more changes in Chinas role in global and
regional economy.
 From trade perspective, we can find these
changes through the structure of Chinas
and its main trade partners exports and
imports.
1. From Following Goose to Regional Export
Platform
 China began to reopen itself to the world
at the end of the 1970s.
At first it was merely an exporter of typical
labour-intensive products and even
natural resources, which was not a
surprising phenomenon:
It has been the characteristic role of an
economic newcomer and following goose
according to the traditional flying geese
paradigm in Asia, where Japan was then
taking the economic lead.
 Under the traditional flying geese paradigm, a
special triangular trade pattern has existed in
Asia: The industrialisation and economic
development of emerging Asian economies
depended on capital goods imports and FDI
inflows from Japan, and their products were
exported mainly to the US, so they had a surplus
vis--vis the US and a deficit vis--vis Japan.
China was among those emerging economies
and played no special role until the early 1990s.
 As the pattern of division of labour in the
region changed from inter-industry vertical
specialisation to intra-industry vertical
specialisation, or production
fragmentation, and through further
measures of economic reforms and
opening up (including the entrance of the
WTO in 2001), the greatly increased
production capacity of China could merge
with the global markets and regional
production networks, since the mid-1990s a
new triangular trade pattern emerged.
 On the one hand, both Japan and other
emerging Asian economies invest and
export capital goods, including final capital
goods and components, to China; on the
other, China exports more and more to the
traditional markets of other Asian
economies. As a result, China has to some
extent substituted Japan and emerging
Asian economies as the most important
source of imports for the US. A
crowding out effect has seemed to be in
operation.
 Chinas greater penetration of
industrialised markets was accompanied by
a surge in Chinas imports from all regions
especially Asia.
This means the success of Chinas exports
to out of the region will improve the other
Asian economies exports to China.
So in this period China played a role of the
export platform for the region.
 -40
-20
0
100
120

20
40
60
80
1993

1994

1995

1996

1997

1998

1999

2000

2001

China
2002

2003

2004

2005
EA Economies 2006

2007

2008

2009

2010

2011

2012

2013
 China Japan US
Importer
.
Exporter 1999 2007 2014 1999 2007 2014 1999 2007 2014

Korea
9.52 22.07 25.32 11.04 7.10 5.61 20.51 12.32 12.25

Singapore
8.32 3.32 18.88 16.23 2.94 2.00 56.60 34.83 4.14

Philippines
1.66 11.39 13.00 14.47 13.30 22.52 29.82 17.03 14.11

Thailand
4.08 9.64 11.04 5.38 18.63 9.67 21.04 6.23 10.51

Malaysia
4.15 9.14 12.15 15.69 8.78 10.88 24.67 15.64 8.47

Indonesia
3.19 7.18 9.34 20.97 13.93 8.26 11.00 11.41 9.00

Hong Kong
33.33 48.68 53.88 5.41 4.45 3.58 23.78 13.70 9.30
 Although we can say that Chinas role as
an export platform is beneficial both for
China and other Asian economies, it is
overall less than ideal and has its own
shortcomings.
 This central position is actually based on
China's labour force advantages, since
almost half of China's exports are so-
called processing and assembling exports,
i.e. the value-added that China obtained
from this trade was limited.
 For a more equal distribution of the gains
of trade between China and the raw
material exporters, it is important for China
to change its position as a market for
intermediates (provided by some Asian
economies which export natural resource-
based intermediates) and capital goods to
a market for final consumer goods,
3. From Export Platform to Market
Provider
 If China want to play a more positive role in the regional
and global economy, it should absorb more final
products, especially final consumer goods from other
countries.
Recently, the pattern of China's trade and investment has
shown Chinas ascendance from absorbing
intermediaries to a market for consumer goods.
Firstly, there have been changes to China's trade
dependency and its demand structure.
 China Japan US
Importer
.
Exporter 1999 2007 2014 1999 2007 2014 1999 2007 2014

Korea
1.95 4.56 6.66 15.64 4.60 5.08 36.31 25.55 25.13

Singapore
2.90 3.32 3.83 9.67 2.94 10.76 19.33 34.83 8.54

Philippines
0.83 3.55 5.08 16.21 15.84 19.81 56.53 40.20 28.8

Thailand
0.93 3.32 7.43 16.26 12.12 12.56 36.76 23.89 15.89

Malaysia
0.60 1.79 2.51 10.30 6.58 9.77 36.74 22.57 13.86

Indonesia
0.58 1.58 3.11 11.91 6.85 7.43 38.00 34.21 27.26

Hong Kong
4.33 7.29 9.29 2.15 1.74 4.13 32.68 22.79 8.85






 Compared with Chinas huge shares in the
total exports of other Asian economies,
China's share in their exports of consumer
goods is still quite small, and the growth
rates of their exports of consumer goods to
China are also relatively small. In the
absence of positive exogenous shocks, the
endogenous process of this transformation
might take a long time to complete.
4. The Belt and Road and Chinas Future
Role in Global Economy
 In the field of foreign economic relations,
the so called One Belt One Road (
) strategy, which includes the initiative of
the Silk Road Economic Belt (
) and the 21st Century Maritime Silk
Road (21 ) will be one of
the main focuses of China's future
international economic cooperation.
 The completion of the One Belt One Road
initiative would probably increase Chinas
investment and export of capital goods
(rather than consumer goods) to, and
import of both primary goods and
consumer goods from the countries along
the Belt and Road.
 Thus, the Belt and Road will promote both the
diversification of the geographical structure and
product range of Chinas trade and the
transformation of its own domestic production
structure.
5. Potentials and Challenges
 New domestic and external environments asked
for more changes in Chinas economic structure
and foreign economic relations.
 GDP growth rate in China
 As China promoted the Belt and Road
initiative, The TPP dominated by the US also
made its own progress.

China seems to look to the countries within the

Belt and Road areas as the potential driving
force for its future trade and OFDI, but we
should notice that there are both new potentials
and challenges.
 Indonesia
 Malaysia
 Thailand
 Philippines
 Singapore
 Vietnam
 India
 Pakistan
 Sri Lanka
 Kazakhstan
 Kyrgyzstan
 Export to Southeast Asia
 Export to South Asia
 Export to Central Asia
 Import from Southeast Asia
 Import from South Asia
 Import from Central Asia
 Chinas future role in the regional and
global economy depends largely on its
own economic transition and the
development of regional and global
cooperation arrangements
Gracias