Chinas Trade Dynamism Poses Challenge to Poorer Asian Neighbours, New UNDP Report Finds
GENEVA, 29 June: The poorest countries of Asia are being out-competed by exports from China and selling little back to China in return, making it harder to benefit from their opening to international trade, says a report published Thursday by the United Nations Development Programme (UNDP).
UNDPs new Asia-Pacific Human Development Report 2006, “Trade on Human Terms”, was launched in Phnom Penh, Cambodia, which like most of Asias Least Developed Countries (LDCs) has been suffering from a severe trade imbalance with China.
Cambodia exported 30 million US dollar only to China in 2004, but imported for 452 million dollar; similarly, Bangladesh exported 57 million dollar to China, while importing a record 1,9 billion dollar.
More than 20 percent of imports by these poor countries are from China. This has led to a displacement of domestic industries like leather and footwear, wood products, plastic products, paper and paper products, glass products and cycles and motorcycles.
“China’s stunning economic growth, in so many ways an inspiration to its Asia-Pacific neighbours, is not delivering reciprocal benefits to its Asia-Pacific trading partners – and is in some cases creating difficulties for them,” says the Foreword to the Report.
“One of the messages of this report is that success in the global marketplace brings with it new opportunities and responsibilities, especially toward the least developed nations”, it stated.
Following the demise (bortfaldet) of textile quotas, China also has rapidly expanded its share of textile and clothing exports in the US and EU markets. Chinese textile and clothing exports to these markets increased by more than 15 billion dollar in 2005, while those of Asian LDCs have shown hardly any growth.
Countries like Bangladesh, Nepal, Laos and Cambodia, which had benefited from quotas, are increasingly vulnerable to competition from China in export markets.
Chinas trade with its Asian neighbours now comprises the bulk of its global trade – but more than 75 per cent of its exchange with the region is with high-income nations such as Japan, South Korea and Singapore.
In part, the Report said, this is because the poorest countries of Asia-Pacific have a very narrow range of exports and cannot meet Beijings high-tech and other import needs.
The Report makes a case for special and differential treatment of LDCs exports to large markets in Asia, such as China. In addition, it emphasizes the need for cooperation among Asias developing countries to maximize benefits to the poorest nations.
A case also is made for pooling of the massive foreign exchange reserves that countries such as China hold, in order to finance the higher oil import bill that is causing an oil price “shock” to the region’s poorer countries.
– Trade integration alone is not sufficient to ensure economic growth or poverty alleviation for the Least Developed Countries, cautioned Hafiz A. Pasha, UN Assistant Secretary-General and Director of the UN Development Programme Regional Bureau for Asia and the Pacific.
While trade has been the engine of Asias economic dynamism, it also has contributed to increased inequalities in the Asia-Pacific region, not only between countries but also within national borders, the Report shows.
The Report was developed by a team of experts from the region under the auspices of the UNDP Regional Centre in Colombo, Sri Lanka.
Because a number of poor Asia-Pacific countries have had problems implementing their agreements with the World Trade Organization (WTO), many are negotiating regional and bilateral trade agreements, the Report also noted.
– The launch of the Report comes at a critical time, with only a few months left before the end-of-year deadline for the completion of the Doha Development Round, noted UNDP Administrator Kemal Dervis, adding:
– We are at the midpoint of the 10-year Brussels Programme of Action for Least Developed Countries and have less than a decade to achieve the targets of the Millennium Development Goals.
The universally endorsed Goals seek to halve poverty by 2015.
Despite Asias overall economic growth and rising share of world trade in recent years, the regions poorest countries have struggled to maintain their share of global commerce, the Report says.
The Report emphasizes the economic consequences for Asias LDCs of what it says is a neglect of the agricultural sector, noting that Asia is becoming a net food importer, while agricultural subsidies and tariffs policies in advanced economies continue to post major obstacles to farm exports from poor Asian nations.
There are 14 LDCs in the Asia-Pacific region: They are
Afghanistan, Bangladesh, Bhutan, Cambodia, Kiribati, Laos, Maldives, Myanmar (Burma), Nepal, Samoa, Solomon Islands, Timor-Leste (Øst-Timor), Tuvalu and Vanuatu.
These countries, home to 260 million people, face
– severe challenges from poor infrastructure,
– a high degree of vulnerability to natural disasters,
– inadequate diversification of the economy,
– unsatisfactory health and education facilities, and
– generally low savings rates.
Despite some human development improvements, the per-capita annual Gross Domestic Product of Asia-Pacifics lowest-income nations was only 375 US dollar in 2003, less than half that of even other Asia-Pacific developing countries.
It is time for developed countries to address the vulnerability of the poorest nations in the current global trade environment, the Report says. However, even an ambitious international package can only complement, not substitute for, a global trade deal under the WTOs struggling Doha Round, the Report stresses.
Many observers feel that prospects for such a deal are all but gone. The five-year-long talks currently face a deadline at the end of June for a WTO framework agreement on agricultural market access and industrial tariffs, but are mired in a three-way standoff among the European Union, United States and a group of larger developing countries.
“It may not be obvious why LDCs would want to gain access to the World Trade Organization – and the further liberalization that this implies,” the Report states.
“For most, however, the alternative is worse – marginalization or bilateral control by one or two major powers. The multilateral WTO is still a better option if it offers some consistent basic ground rules.”
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The UN Development Programme (UNDP) works in 37 countries in the Asia-Pacific region. From 2006 onward, UNDP Asia-Pacific Human Development Reports will become an annual series, providing the region with a new forum for furthering dialogue and constructive debate in support of a regional and global pro-poor agenda.
For more information about UNDPs work in the Asia-Pacific region, visit:
www.undp.org/rbap/
