“We Need To Do And We Can Do A Lot” (II)
Source: CAEXPO Secretariat Time:2018-04-17 10:09:45
Combination of market opening and industry upgrading
“I usually accept the comments from ASEAN countries that the structure of trade and investment between China and ASEAN is unreasonable. As for the structure of trade, China has a surplus in trade with large amount of primary commodity imports and manufactured goods exports. As for the structure of investment, the amount of Chinese investment is smaller than ASEAN’s. China invests primarily in resource development and engineering contract instead of hi-tech or manufacturing,” said Xu Ningning.
Xu analyzed, taking structure in trade as an example, it depended on Industrial complementarity and respective industrial structure, which was an economic behavior of enterprise out of willingness. Some ASEAN countries should consider whether the trading benefits their general development of foreign trade but pay much attention to trade deficit to China.
ASEAN enterprises imported semi-finished products (gray cloths or auxiliary for clothing and source and auxiliary for shoes) and machinery from China, which were used for producing higher-value goods when selling to overseas market, therefore it boosted the general growth of foreign trade. For instance, Vietnam’s major exports, cloth and shoes whose raw materials and semi-finished products were imported from China would enjoy higher value after the imports being deep processed. Overall, it was not bad for Vietnam to have trade deficit to China. In addition, even though Indonesia had trade deficit to China, Indonesia won general boost in foreign trade in 2017 with its trade surplus hitting 11.835 billion USD.
Meanwhile, with the development of ASEAN industrialization, more and more manufactured goods of ASEAN countries including resource processing products exported to China. Chinese trade surplus to ASEAN was dropping. In 2017, Chinese trade surplus to ASEAN reached 43.4 billion USD, down by 27.4% compared with 59.77 billion USD in 2016.
“Pay much attention to the trade deficit to China might result in some countries not willing to open to China nor to upgrade China-ASEAN Free Trade Area (FTA). Thus, China and ASEAN should exert all strength to combine opening with industrial upgrading,” said Xu.