quite agree - China 'should export more to Asia and less to US'
By Chi-chu Tschang
FOR THE STRAITS TIMES
SUZHOU - China should export more to other parts of Asia instead of the United States to help erase its trade deficit with many of its Asian neighbours, a top economist with the Asian Development Bank (ADB) said yesterday.
China had a trade surplus of US$40.9 billion (S$71.5 billion) with the US as of end-September, which ADB chief economist Tang Min likened to 'putting all its eggs in one basket'.
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Some US politicians have pointed to China's trade surplus with the US and called for America's fourth-largest trade partner to let the yuan appreciate to slow the flood of Chinese exports.
On the other hand, China has a trade deficit with Singapore, South Korea, Taiwan, Japan, Indonesia, Thailand and the Philippines totalling more than US$68 billion.
China's trade surplus with all its partners narrowed by more than half to US$9.15 billion in the first nine months of this year as manufacturers imported more raw materials such as steel and oil.
'China's trade surplus with the US isn't enough to counter-balance its trade deficits with Singapore, South Korea and Taiwan,' Mr Tang said at the China Economic Growth Forum here.
'We estimate that if the present situation continues, in one or two years, China might face a trade balance or even a small deficit.'
More than 450,000 foreign investors have set up factories in China. The surge in factory production, which grew by 17.2 per cent last month, has helped Asia's second-largest economy after Japan to grow 8.5 per cent in the first three quarters.
China's economy has grown faster than any other East Asian economy this year.
Economists expect the Chinese economy as well as other Asian economies to expand even faster next year.
Mr Tang expects economies in East and South-east Asia to grow roughly one percentage point faster next year.
'Next year, the global environment facing our country will be much better than this year,' said Mr Zhu Zhixin, deputy director of the State Development and Reform Commission. 'The US economy grew 7.2 per cent in the third quarter, its fastest pace in 20 years. It should continue to grow quickly next year.'
However, some economists doubt that the world's largest economy will be able to sustain its strong economic growth after 2005.
Ms Gail Foster, chief economist of the Conference Board, a US research group, said the economy is benefiting from an 'extraordinary amount of stimulus' in the potent combination of tax cuts, low interest rates and a weak US dollar.
'A slowdown in the United States almost always brings a slowdown in the rest of the world,' she said.
'The challenge for China is to look at its own dynamics and ask itself how it will navigate these dynamics that come after a very good period of economic growth.'
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