China's Development Beneficial to Japan: Interview

Home>>Business

Last updated at: (Beijing Time) Thursday, January 30, 2003

China's Development Beneficial to Japan: Interview

DISCUSSION

CHINESE

SEND TO FRIEND

"China should not be blamed of the deflation in Japan. Instead, its deflation is rooted in the insufficiency of domestic needs in Japan." Chi Hung KWAN, senior fellow with Research Institute of Economy, Trade and Industry (RIETI), noted in the exclusive interview lately. He also added, "Chinese and Japanese economies are actually complementary to each other. Japan should seize the development opportunity of China, speeding up the structural reform to realize the economic recovery."

Graduating from Social Science (Economics), Chinese University of Hong Kong in 1979, Chi Hung KWAN held Ph. D. in Economics, University of Tokyo later in 1996. Before joining RIETI, he once worked in Nomura Research Institute for years. And thus, he has accumulated rich expertise in Yen block, China's economic reform and regional integration in Asia. Pinpointing the voguish theories of "Chinese Economy Threat" and "China Exporting Deflation" in Japan, Chi Hung KWAN noted that China still falls far behind Japan in terms of economic development and Chinese economy is therefore not in competition with, but complementary to the economy of Japan.

He underlined the enormous achievements in industry that China has made in the past 20 years, but China's competitiveness lies in the rich resource of labor force and labor-intensive exports make up the majority, he pointed out. Compared with Japan whose exportation is composed mainly of technological-intensive products, China means an opportunity more than a threat. By studying data of 10,000 kinds of industrial imports of the United States, Chi Hung KWAN came to see an 8.3-percent overlap between Chinese and Japanese exports items on the U.S. market in 1995 and 16.3 percent in 2000. In other words, 16 percent exports of China and Japan may compete against each other while 84 percent are, however, complementary to each other. Even among overlapping products, Japan usually exports high-grade goods whereas China exports general goods. Besides, China relies heavily on importation of intermediary products and accessories, which fall short of the actual competition extent between China and Japan than calculated. So, "competition only exists in the low-value-added and recession trades of Japan that have lost their comparative advantages".

The price deduction of Chinese products does impose certain pressure upon the deflation of Japan, but exerts a positive effect on Japanese economy, which may be a "benign deflation". With respect to demand, there is basically no competition between products of the two countries at large, although Chinese products replace part of Japanese exports and domestic consumer goods. As regards supply, intermediary products and accessories take up a large part of China's exports to Japan, which help Japanese enterprises to reduce costs and expand production & marketing scales. Chi Hung KWAN illustrated with UNIQLO, a Japanese brand name in fashion. It adopts the domestic designing and materials, yet made by Chinese laborers, then taken back to Japan for final processing and sales, while the two sides share the profits. Such a result is not only in the interest of Japanese consumers, but also to the advantage of Japanese enterprises.

In the end, Chi Hung KWAN came to the conclusion that Japanese enterprises benefit from the development in China. Recent years have been witnessing a business growth in Japanese enterprises by various means of making direct investments in China, engaging in by-commissioning-processing, developing products, etc. Through making use of the rich Chinese labors and advanced Japanese technologies, Japanese enterprises reap considerable returns. Moreover, the low-priced-but-fine-quality products from China have brought numerous benefits to a great number of consumers in Japan.

By PD Online Staff Zhu Lizhen

Questions?Comments? Click here

China's Growth Benefits Southeast Asia: Official

China's Growth Benefits Neighbours - ADB

Beijing to Cancel 'Hotels for Hosting Foreign Visitors' ( 11 Messages)

Crazy Pursuit for Graduate Education, an Ailing Personnel System ( 2 Messages)

Chinese Experts Demand Return of Cultural Relics ( 30 Messages)

Chinese Bid Farewell to Outworn Doctrine of Egalitarianism ( 22 Messages)

Full Text of UN Security Council Resolution 1441 on Iraq ( 3 Messages)