China’s Business Relations with China’s Business Relations with Australia and PakistanAustralia and Pakistan

Department of International TradeZhejiang Gongshang University, Chinahttp://econet.zjgsu.edu.cn/andrew.wang/MSN:wangguoanhz@hotmail.com Skype:wangguoan2006; QQ:114841804http://econet.zjgsu.edu.cn/andrew.wangE-mail: wangguoan@zjgsu.edu.cn

Prof. Andrew (Guo-An) Wang Prof. Andrew (Guo-An) Wang 王国安王国安

Contents China’s economic growth China’s trade relations with its partners China’s trade relations with Australia and Pakistan Sources of trade frictions with its partnersSources of trade frictions with its partners References/Useful websites

I. China’s economic growth Fastest growing economy, annual growth rate of

about 10% since1978. GDP:US$7.5trillion in 2011, No.2 economic power

since 2010. It is expected to surpass USA in 2019. But its GDP per capita is $4,283 (in 2010), only 12% of Japan’s and 10% of USA’s, ranking 95th in the world.

I. China’s economic growth

No. 2 largest trading nation in the world, its trade volume amounted to US$3.6 trillion in 2011.

Largest exporter and second largest importer. Largest foreign exchange reserves: US$ 3.18 trillion

in 2011.

I. China’s economic growth

Largest consumer of natural resources, increasing at the rate of 8.9% in the last 10 years.

Second largest financial revenue in the world, but China’s medical expenditure accounts for only 1.2% of its GDP. Most of the farming population have no medical or social insurance.

Biggest FDI recipient among developing countries in the last two decades.

I. China’s economic growth

China’s outbound FDI increased to over US$ 60 billion in 2011, the fifth outbound Foreign Direct Investor in the world.

Increasing focus on company acquisition in developed countries.

I. China’s economic growth

Largest manufacturer in the world after USA was the largest for 110 years, but most of the foreign companies’ R & D and marketing centers are in developed countries, such in USA, EU and Japan. Chinese workers are paid only a very low salary and are exploited and its environment polluted and natural resources exhausted.

I. China’s economic growth

The economic miracle in China in the last 33 years, but it is made by the world. China is only a small shareholder in the economic miracle, most of the profits have gone to the transnational companies from developed countries. Foreign companies in China have contributed a lot to China’s GDP. Many products have been made in China, but few have been designed or created or invented in China.

II. China’s trade relations with its partners

FTA with Chile, ASEAN, Pakistan, New Zealand, Singapore, Peru and Costa Rica.

CEPA (Closer Economic Partnership Arrangement) with Hong Kong and Macau; ECFA （ Economic Cooperation Framework Agreement) with Taiwan.

II. China’s trade relations with its partners

Biggest trading partner of most of Asian countries and most of the economic powers.

Ten major trade partners in 2008: EU,USA, Japan, Hong Kong, S. Korea, Taiwan, Australia, Russia and India. Its trade volume with them amounted to US$1944.5 billion, accounting for 75.9% of its total trade.

China's top trade partners 2009 (US$ billion) Source: PRC General Administration of Customs, China's Customs Statistics

Rank Country/region Volume

1 United States 298.3

2 Japan 228.9

3 Hong Kong 174.9

4 South Korea 156.2

5 Taiwan 106.2

6 Germany 105.7

7 Australia 60.1

8 Malaysia 52.0

9 Singapore 47.9

10 India 43.4

China's top trade partners 2010 (US$ billion) Source: PRC General Administration of Customs, China's Customs Statistics

Taiwan Brazil Hong Kong South Korea USA Japan Australia EU Russia India

III. Sino-Australia trade relations

III. Sino-Australia trade relations

Established formal diplomatic relations in1972 when bilateral trade volume amounted to only US$72 million, increased to US$6.3 billion in 1999.

Since China joined the World Trade Organization (WTO), Sino-Australian trade volume has shot up.

China has become Australia’s largest trading partner since 2009.

2008-2009 bilateral trade volume reached nearly US$60 billion, 36.27% higher than the previous year.

Over 66% of Australia’s total exports to China originate from Western Australia.

III. Sino-Australia Trade Volume

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Trade Volume(US $ Billion)

Total Export Import

III. Sino-Australia trade relations

Trade deficit with Australia: $18.8 billion in 2009 Main imports from Australia: minerals, base metals and

related products, textile materials Main exports to Australia: mechanical and electronic

products, textiles, furniture and toys Australia is China’s eighth biggest trade partner. The Sino-Australian free trade talks began in April 2005

and 13 rounds of talks have been conducted. In April 2008, Australian former Prime Minister Kevin Rudd visited China and agreed to restart free trade talks.

Western Australia is BIG

TexasTexas

JapanJapan

United KingdomUnited Kingdom

TexasTexas

JapanJapan

United KingdomUnited KingdomWA’s population of 2.2 million people live

across an area three times as big as Texas

Perth is the western gateway to Australia

Perth Statistics

Perth, Western Australia is Australia’s strongest economy.

10 % of Australia’s population 22% of Australia’s jobs 35% of Australia’s GDP 40% of Australia’s Exports

Perth Statistics

Perth, Western Australia is Australia’s strongest economy.

WA exports to China in 2010 reached A$41billion, accounting for 40% of WA exports and 70% of Australian exports to China. 

WA exports to China grew from A$4 billion in 2002 to A$41 billion in 2010.

IV. Sino-Pakistan trade relations

China and Pakistan established their diplomatic relations on May 21, 1951.

The stable relationship has set a good model in the world diplomatic history over the past 60 years.

Friends in need are friends indeed

Pakistan’s all reserved tents and emergency assistance to China after 8.0-magnitude Wenchuan earthquake in Sichuan Province in 2008, and all its transport planes and all its reserved tents to China’s southern parts during its fight against the severe floods in 2009

Pakistan’s generous immediate aid to the earthquake-struck Yushu country in Qinghai, China.

Friends in need are friends indeed

China’s aid to Pakistan has created many records in the history of China’s aid to and relief work in other countries, such as the largest-ever humanitarian aid (US$250 million), first medical relief team abroad, first use of military helicopters, first fleet of 101 trucks loaded with daily necessities to travel by land during Pakistan’s battle against its flood in 2010.

Friends in need are friends indeed

China’s full recognition of and support to Pakistan’s effort in combating terrorism.

Pakistan’s strong support to China on issues of Taiwan, Tibet, Xinjiang (East Turkistan) and human rights and in China’s battle against terrorism, separatism and extremism on the international stage.

In brief, we are all-weather strategic partners, good neighbors, good friends and good brothers.

IV. Sino-Pakistan trade relations

The bilateral trade volume amounted to only US$ 580 million in 1990 and the number stayed around US$ 1 billion in the 1990s.

Since China joined the World Trade Organization (WTO), Sino-Pakistan trade volume has shot up.

China is the fourth trade partner, the second import original place and the seventh export market of Pakistan.

The bilateral trade volume amounted to US$6.98 billion in 2008. Affected by the global financial crisis, the bilateral trade volume of 2009 dropped a little, but still amounted to US$ 6.67 billion.

IV. Sino-Pakistan Trade Volume

IV. Sino-Pakistan trade relations

Trade deficit of Pakistan with China: $4.389 billion in 2009

China’s main exports to Pakistan include high-tech products, chemical products, plastic products and home appliances, etc.

Pakistan’s main exports to China are cotton, textiles, leather and aquatic products, etc.

IV. Sino-Pakistan trade relations China-Pakistan Free Trade Agreement (CPFTA)

was signed on 24th November 2006 and took effect on July 1, 2007. China-Pakistan Agreement on Trade in Services was signed and took effect on 21st February 2009 and took effect on October 10, 2009.

The bilateral trade volume with Pakistan would soar to US$15 billion by 2015.

1. The unstable and risk zones in Pakistan have undoubtedly made some of the Chinese managers reluctant to invest in Pakistan. Suicide attacks and bombing have killed 4,000 people across Pakistan in recent years according to AFP.

2. Pakistan’s infrastructure in transportation, communication, energy supply, education has much room for improvement.

Barriers to Sino-Pakistan economic cooperation

3. Compared with the wide range of imports from China, the number of products from Pakistan for exportation to China is limited. Therefore Pakistan maintains a growing trade deficit with China, which is a concern for both sides.

4. In the Chinese market, the enterprises from Pakistan are not as aggressive and active as their counterparts from other Asian countries.

Barriers to Sino-Pakistan economic cooperation

5. Pakistan focuses its attention to bringing in technology and attracting the investment from China and reduction of the trade deficit while Chinese enterprises tend to focus on the expansion of their market and the exploitation of the natural resources in Pakistan. The difference of both sides’ objectives can lead to the slow pace of cooperation, unreasonable economic structures, the constrained cooperation scale.

Barriers to Sino-Pakistan economic cooperation

6. The Sino-Pakistan cultural differences have made it difficult for both sides to deepen economic cooperation. We have to enhance communication between the young generation of the two countries.

Barriers to Sino-Pakistan economic cooperation

1. Increasingly strengthened political ties and all weather strategic partnership.

2. Complementary economic structures

China’s strong relationship with Pakistan is conducive to its food and energy security, maintenance of its economic and trade relationship with the countries in the Gulf region and consolidation of its economic presence in Asia.

Favorable conditions for widening Sino-Pakistan economic cooperation

Favorable conditions for widening Sino-Pakistan economic cooperation

3. Both sides need each other in its economic development. Pakistan needs FDI to rebuild its infrastructure severely damaged by its natural disasters and terrorist attacks.

4. Need to keep power balance in regional peace and development in South Asia.

5. Geographical proximity/closeness

6. Institutional guarantee by FTA

The establishment of the China-Pakistan free

trade area can boost both sides’ productivity and

deepen the cooperation level and broaden

cooperation scale. The China-Pakistan Business

Summit offers a good opportunity to the two sides

to deepen our collaboration in all sectors.7. Pakistan’s very attractive FDI policies

Favorable conditions for widening Sino-Pakistan economic cooperation

Promising Sino-Pakistan economic cooperation

Agreements and trade deals formalized by business leaders and cabinet ministers during Chinese Premier Wen’s amounted to $35 billion (AFP). On 19th December 2010, Tariq Puri, the chief executive officer from Pakistan Trade Development Authority Of Pakistan (TDAP) announced that the bilateral trade volume between China and Pakistan would soar to US$10 billion in the next two years and would amount to US$15 billion by 2015.

Promising Sino-Pakistan economic cooperation

China’s Ministry of Commerce has vowed to increase the bilateral trade volume to US$15 billion by 2015,too. Mr. Masood Khan, Pakistani ambassador to China said that Sino-Pakistan trade volume is likely to increase to US$18 billion in less five years.

V. Sources of trade frictionsV. Sources of trade frictions

Foreign trade surplus value USA: USD101.9 billion 2005, USD177.47 billion in

2006, $256 billion in 2007, $227 billion in 2009, US$183.1 billion in 2010.

Since 1997, the trade between China and USA has grown 12.5% per year and more than one quarter of Chinese exports are sold to USA. But 60% of Chinese-made products are made by US companies in China.

V. Sources of trade frictionV. Sources of trade friction

Antidumping duties against Chinese products Exchange rate between the Chinese currency RMB

yuan and other major currencies, such as US$ and Japanese yen

Technical barriers to Chinese products: health and sanitary regulation, packaging and labeling regulation

Technical standards (e.g. ISO9000-9004/GB/T19000; ISO14000: environment; ISO18000,safety.)

V. Sources of trade frictionV. Sources of trade friction Special Safeguard (export quantity) measures Intellectual Property Rights violations and

protection During the 11th Five-Year Plan period (2006-2010), a total of 265,000 cases concerning trademark violations had been investigated, an annual average of 53,000 cases. China investigated 56,000 trademark rights infringement cases in 2010, an increase of 9.78 percent year on year

Human rights Competition for natural resources

VI. References / Useful websites

For more information about China’s foreign trade, please visit

http://www.stats.gov.cn/english/statisticaldata http://english.mofcom.gov.cn/ http://english.customs.gov.cn/ http://www.cantonfair.org.cn/en/ http://en.expo2010.cn/ www.alibaba.com

Any questions?

Thank you for your attention.

Professor Guo An (Andrew) Wang

Dept. of International Trade

Zhejiang Gongshang University, China

E-mail ： wangguoan@zjgsu.edu.cn

Mobile:86-136-0051-6079