• SAARC

SAARC

This paper analyses the vulnerability of selected developing countries of China’s its entry to the WTO.

General findings:

• In labour-intensive manufactured goods, China competes mainly with South Asian countries and a few Latin American and African countries
• Some Latin American and African countries may benefit from the expansion of China’s imports of foods and agricultural raw materials
• For newly industrialising economies (NIE’s), competition involves complementary effects, through the import of parts and components, which will offset the competition effects in the short and medium term
• As China develops its capacity to produce components competition may become harder for the NIE’s

ASEAN:

• Thailand is vulnerable in clothing, miscellaneous household equipment and electric machinery.
• Indonesia has little to worry except for furniture

SAARC:

• India concentrates mainly on undergarments, and China in outer garments
• Bangladesh, Sri Lanka, Pakistan, and Nepal have a similar export structure with China in some clothing items, but overall have been aggressive in exportation of these products
• Sri Lanka and Pakistan also compete with China in toys and sporting goods, but both have shown some strength in their exports

Latin America

• Mexico has a strong competitive position vis-à-vis China in a number of clothing items, but weaker in a few assembly operations
• Costa Rica’s competitive advantage has noticeably improved for a number of clothing items and a few assembly operations
• Haiti competes with China in 8 products, mostly clothing. It has a strong competitive position in footwear, one clothing item and some base metals
• Uruguay’s relative competitive position is weak in a number of labour intensive products

Africa

• The export structure of African countries is different from that of China, except for Egypt, Morocco, Tunisia and Malawi. These countries have improved their competitive position in the clothing sector

In conclusion the paper notes the following:

• China’s entry into the WTO will not change, for some time, its market access for textiles and clothing for it to be a threat to other developing countries
• China’s growth in quota for exports to developed countries will increase far less than other developing countries. Nevertheless, if China attempts devaluation the situation could change radically although this is unlikely at present
• China’s attempt to increase domestic value added in exports could lead to improvement in its competitiveness in technology/skill intensive products

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