On January 28, the Japanese Yomiuri Shimbun
published an article entitled "China's Growing Exports
Aggravate Japan's Deflation". While noting that in 2002
China surpassed the United States for the first time to
become Japan's top commodity exporter, it quotes some
domestic comments claiming that China's export of large
quantities of low-cost commodities to Japan has, to a
certain extent, aggravated its deflation.
The article also
has quoted the remarks of all official from the Japanese
Ministry of Finance, who claimed that the exchange rate of
the Renminbi (RMB) is much lower than its real circulation
capacity, and that the growth of China's export is
equivalent to exporting deflation to other
countries.
Chen Hong, research fellow with the World Economy
and Politics Research Institute under the China Academy of
Social Sciences, pointed out that as Japan's import trade
takes up a small share of the GDP, its impact on the
country's economy is quite limited. The export trade of
China accounts for 20 percent of its GDP, while that of
Japan makes up less than 10 percent of its GDP and the rate
of imports is even lower. Japan's imports from China only
account for 16 percent of its total import volume. Even if
Japan's total imports are from China, the low rate is still
not enough to affect Japan's domestic economy.
Further more,
Chen noted, the foreign trade relationship between Japan and
China and Southeast Asian countries is quite special. A
considerable part of the exports of China and Southeast
Asian countries to Japan are primary products, such as raw
materials, components and parts, which are processed into
high-grade products to be exported to the United States and
the European market. The United States is Japan's largest
importer, and its economic recession has exerted the
greatest influence on the Japanese economy. China's export
to Japan is a component part of Japan's export trade.
Japan's economic and consumption slump does not lie in the
amount of imports from China, but in the amount of exports
to the United States.
In addition, the grade of competition
between the export commodities of China and Japan are
varied. The export of ordinary machine-building products is
divided into three grades. China's exports with competitive
advantages are machine-building products with a low
technological level such as components and parts, and
low-grade products of auto, household electrical appliances
and electronic industries. The United States and Germany
possess the sophisticated technology and are the main
exporters of the products of these industries, including
astronautical and aeronautical products, precision
components and parts and precision machine tools. Japan
mainly exports products with an upper-middle technological
level. Hence, the increased exports of China to Japan do not
compete with the latter's domestic and export
commodities.
According to the 2002 foreign trade statistics
released by the Japanese Ministry of Finance, among the
total commodities imported 'by Japan from China, fish, other
aquatic products and manufactured goods recorded the highest
growth rate. The statistics noted that one of the reasons
for the rapid growth of China's exports to Japan in 2002 was
that China imported raw materials and semi-finished products
from Japan and then exported the processed goods to Japan.
This indicates that, to a great extent, China's benefit from
exports to Japan is limited to incomes from low processing
fees.
The root cause for the deflation in Japan is its
sluggish economy, argued Chen. To reduce Japan's deflation
pressure, it is necessary to undertake structural
readjustment and industrial upgrading. The view that
attributes Japan's deflation to the growth of China's
exports is not new. If it is advanced by Japanese government
officials, a certain political aim may be involved, said
Chen. By putting the blame on China, they attempted to make
China a scapegoat for their policy errors.
China should deal
with similar views in Japan, the United States and other
countries cold-mindedly, said Chen. On the one hand, China
should feel proud, as it has seized the spotlight worldwide
following the development of its economy and the enhancement
of its national strength. The Chinese economy is drawing
increasingly extensive attention, no matter what attempts
the watchers harbor. On the other hand, China should be
clearly aware of the fact that its economic strength is
still quite limited and has not yet reached the extent of
affecting the economies of other countries. China's
industrial structure and export products also face the
pressure of upgrading, and most export commodities are
labor-intensive products with a low technological level and
poor profits. At present, it is imperative for China to
continuously enlarge its domestic demand and maintain the
steady growth of its economy. "It is of primary
importance to develop our own economy."
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