Ten Trillion in Imports over Five Years:
A New Sheriff in Town?
China Times editorial (Taipei, Taiwan, ROC)
April 16, 2013
Summary: When Xi Jinping spoke of "Ten trillion US in imports over five years," he was telling the world that Mainland China's economic pie is huge, and that he hoped other countries would fight over it. The Mainland has undergone a transformation, from global factory to global marketplace. The import pie is seductive. That is a fact. Have no doubt. Have we on Taiwan thought about how to get a bigger piece of this pie?
Full text below:
At the Boao Forum Mainland President Xi Jinping said, "Over the next five years, [Mainland] China will import about ten trillion US Dollars in goods. Foreign investment will reach 500 billion US. The number of tourists going overseas is likely to exceed 400 million people." This was a concrete description of just how much the Mainland economy has grown. It was also a declaration to the world: It is time the global economy had a new leader.
If a nation has strong exports, and enjoys a huge trade surplus, it means it is able to sell a lot of goods and earn a lot of money from other countries. It should of course be happy, feel proud, and look forward to maintaining this state of affairs. But such countries often attract criticism. Other countries invariably complain that it is making too much money, that it is "stealing their jobs." This was true for West Germany, Japan, and even the Taiwan Region. Today, it is true of the Mainland Region as well. When one enjoys a huge trade surplus, one invariably becomes the target of criticism.
Those who are truly welcomed, are those who fling open their doors, and buy large quantities of products from other countries. One example is the United States. Following World War II, the United States became the leader of the capitalist countries. The US boasted unparalleled political, military, and economic might. Another important factor also came into play. The United States opened its domestic markets. It allowed its allies to sell goods to the United States, to earn foreign exchange, and to boost their economies. Western Europe, Japan, and the Asian tigers all followed the same growth pattern and shared the same interests. All of them recognized the U.S. as the leader. Scholars who have studied post-war international political and economic relations, have described this relationship as "hegemonic economic privilege and tolerance." This enabled the US to establish hegemonic leadership.
The U.S. gross domestic product (GDP) last year was 15.8 trillion US. It is still the largest economy in the world. Its annual imports are around 2.2 trillion US. The Mainland's GDP was 8.3 trillion, the second largest in the world, just over half that of the U.S. The Mainland's imports last year amounted to 1.8 trillion US, also close to the United States. Germany, which ranks just behind the Mainland, imports about 1.3 trillion US a year, Japan is the world's third-largest economy. It imports only about 800 billion U.S. a year, far less than other advanced industrial countries. Imports amount to only about five or six hundred billion U.S. Obviously, for now and the foreseeable future, only Mainland China rivals the U.S. in import markets. The rest are not worth mentioning.
In fact, the Mainland import market has experienced nearly a decade of rapid growth. This has long been a key factor affecting the economies of many countries. The Mainland Region accounts for approximately 40% of the Taiwan Region's exports. It has long exceeded the United States' 10% or so. If the Mainland economy slumps, the impact on Taiwan will be greater than that of the U.S. This change affects more than Taiwan. In recent years Asian regional trade has greatly increased, from 800 billion U.S. to three trillion US. For neighboring Asian countries, Mainland China has replaced Japan as their primary export market. This has increased the Mainland's political and economic power in the region significantly. Their situation is similar to Taiwan's.
One of the most obvious areas is undoubtedly the raw materials market. The Mainland has become the largest importer of raw materials in the world. The world's leading raw materials exporting countries include Australia, Brazil, Indonesia, and India. Their economies are no longer affected primarily by the U.S. economy, whether for good or ill. Instead, they are affected primarily by the Mainland. In 1992, Brazilian exports to the Mainland were a neglibile 0.4% of total exports. Today that percentage has risen to 15%. For India that number has risen from 0.4% to 10%. Traders in raw materials futures say the Mainland is the "2,000-pound gorilla" in the room. Its appetite for raw materials is insatiable. Last year, the Mainland experienced an economic slowdown. Demand fell. The result was a sharp fall in raw materials prices. Australian, Brazilian, and Indonesian exports were immediately affected. This led to the devaluation of their currencies, and slowed economic growth.
The same is true for tourism. The United Nations World Tourism Organization recently released its latest statistics. Mainland Chinese tourists spent up to $ 10.2 billion on overseas travel last year. Mainland China has surpassed the United States and Germany, and currently ranks number one. It is the first country to exceed 10 billion dollars in overseas tourism expenditures. Overseas tourism amounted to 83 million person visits. The report said Mainland tourists were "the international tourists most willing to spend money." Mainland tourist consumption boosts the economies of the countries visited. The Taiwan Region is not alone in seeking Mainland tourism. Everyone seeks Mainland Chinese tourism. Mainland tourists accounted for nearly half of all luxury items sold by British department stores last year. Britain and the United States have expedited the visa application process for Mainland tourists.
Mao's verse "Qing Yuan Chun" said "This land is so fertile, it has persuaded countless heroes to fight over it." When Xi Jinping spoke of "Ten trillion US in imports over five years," he was telling the world that Mainland China's economic pie is huge, and that he hoped other countries would fight over it. The Mainland has undergone a transformation, from global factory to global marketplace. The import pie is seductive. That is a fact. Have no doubt. Have we on Taiwan thought about how to get a bigger piece of this pie?