China - An Uptrending Economy

China propounds a threat to East Asian Countries in the arena of international trade

The Chinese economy has gone up at an aggressive velocity in the last thirty years or so, which has helped China to put together huge cash reserves that are now occupying a critical part in affecting East Asian countries' trade. It is China all the way in almost all the segments of the East Asian market and seems to be having greater impact with each passing day.

With the rapidly growing role played by China as a worldwide trader and global

Benefactor allows East Asian countries with a prospect to gel together as a cohesive unit

With the Chinese financial prudence.

The coming up of China as an economic motivating force has been bringing about

A mix in the global political and economic showground for the past decade and a half. A number of countries show immense panic of this uptrend in China, while there is another on the other side who welcomes it with much appreciation. 

Brisk growth in trade and industry in China, supplemented by an 'open door' strategy (Under the open-door policy, the Chinese administration is working day in day out to encourage China’s rendezvous with the rest of the world. It is a is two-way thing, I mean to say it not only persuades outsiders to come to China but also promotes Chinese people to go abroad, for business, tourism, education, etc.) of Chinese think tank, is posing nations more specifically East Asian  countries with huge venture and trading opportunities, I will hurriedly add on here, China's rapidly growing Stature in World Trade and probable future trade escalation rate, brings along with it potential threat in the minds of quite a few.

Conflicts of interest between the two have widened and deepened over a wide range of issues, more importantly including trade, as it was writing on the wall, China has decided to go on its own way; While US under Trump has the protectionist approach.

GDP Forecasts to 2030

Opportunities for China

1.     New Prospects for partner Countries:

The rapid economic development in China has opened doors of opportunities for other partner countries as well. With the Chinese economic growth three broad topics stand out i.e. Consumption, moving towards urbanization of the economy, and the shift towards the automated mode of production. These give an opportunity to countries like Taiwan, Hong Kong, and even Australia to strengthen their already strong trade ties.

2.     Huge Domestic Market acting as Investment Magnet

China has been a Magnet for making business investments because of its huge domestic market, more importantly for Cheap and skilled labor last but not the least Good infrastructure. Newly industrial economies (NIEs) such as Taiwan and Hong Kong which are mainly interested in cost reduction, especially labor cost. These countries In place of manufacturing and exporting from their home countries can use China as a platform for exporting their assembled/ fabricated products to the western world.

3.     BRI as Chief Logistics Pathway

BRI project will connect the landlocked “Belt” of two of the globe's biggest economies none other than China and Europe. The route will come up as a key logistics passageway and will present noteworthy energy and mining opportunities for international Companies along with Chinese companies and thus provides a great investment opportunity for International Companies to make an Investment as a partner, supplier or even advisor to reap its benefits in future. Foreign companies have opportunities to become a supplier of the products to Chinese vendors where environmental norms are higher or project requirements is for advanced technologies.

4.     FTA An Exceptional Advantage for ASEAN

 The free Trade Agreement (FTA) between the ASEAN countries in 2014 is a unique initiative between China and East Asian regions. It came into action in 2016 and since then Trade and investment have gone up substantially. The best example is Vietnam the trade volumes have gone up by 25% mainly through the outsourcing of electrical and mechanical assembly cost-sensitive parts. Myanmar is another example in the field of textiles which is almost competing with the Chinese textile industry. China’s Supply Chain linking up has gone up significantly across BRI regions, but the bonding of ASEAN (Association of Southeast Asian Nations) economies has been the strongest like Singapore and Malaysia. Chinese contractors have entered JV’s with foreign partners like China State Construction Engineering’s JV Ssangyong Engineering (of Korea) in the UAE. Financing opportunities for foreign banks, as the project grows its financial requirements will also zoom seeking foreign partners for that.

Threats

China's rapid economic growth has made it difficult for Southeast Asia to break the shackles of coming out of the intermediate earnings lock-in.

1.     Cheap Labor: If we look upon the flip side countries have a great concern that cheap labor costs in China will surely take away East Asian countries' industries and shrink their market shares overall. Its china all the way.

2.     Imbalance in trade: Beyond any doubt, China is a chief trading associate for East Asian countries with trade flow from both sides, which hit a massive US$514.8bn in 2017, the imbalance of trade, is a big headache for East Asian countries. With the exception of Singapore, rest everybody falls in the trade deficit category as far as East Asian Countries are concerned.

3.     Project financing: It is evident that the Chinese bankers will require funds from outside, as the project grows in scale, Now the risk here is most of the private Banks do not carry such financial expertise that they could benefit from a strong partner.

4.     Dependence on China for release on loan As major funding is done by financial institutions of China the release of funds entirely depends on the sweet will of Chinese financial institutions, any delays in that could cost dearly to the countries where infrastructure projects are already in swing, a good example of it is Jakarta to Bandung infrastructure project, which has been under threat chiefly because of no release of funds from China development bank

At the end of the day, China is in the middle of a shift in the direction of high-quality growth which will be more sustainable. Its economy is shifting from “blue-collar” to “open-collar”; from low-tech to high-tech; from rural to urban; from export-focused to domestic consumption-oriented. (Cripps, 2017)

The huge domestic market of China also offers enormous openings for investment, especially through connections with their respective cultural Chinese businesses in the region. The overall assessment is that the rise of China as an economic giant will benefit Asian Pacific countries to an extent as far as trade import-export is concerned, but will have to be vigilant all the time considering the debt-ridden policies of China. All these make China into a big economic force in the world that could serve as a driver for economic growth in East Asian Countries.

We can conclude by saying, the silver lining for the East Asian Countries is the prospective for the development of new trade markets with fresh investors.