Big Tiger overshadows little tigers

[Chris Burford <cburford@xxxxxxxxxx>]

The Financial Times today leads on the bad news of Taiwan's faltering
growth. Specialising in the computer manufacture, it has been particularly
hard hit by the hard cut backs in investment in the USA in the last 12 months.

But that is only part of the story. Last year, for the first time China
overtook Taiwan in annual output of computer hardware with sales of $25.5
billion compared to $23 billion.

A front page article in the IHT,

http://www.iht.com/articles/29706.htm

argues that China is now poised to push ahead vigorously into the same
areas that the little tigers did in the last two decades.

But it will have lower labour costs and an incomparably larger mass
consumer base.


> China's Growth Weighs On Neighboring Countries Michael Richardson
> International Herald Tribune Saturday, August 18, 2001
>
> Once a Savior, It Now Saps Region's Recovery
>
> SINGAPORE From the shadow of the global downturn, China has emerged as the
> sole beacon of rising economic power in East Asia as the rest of the
> region struggles to escape recession.
>
> But an increasing number of observers fear that China's rise harbors a
> dangerous paradox: Rather than helping to pull East Asia out of the
> doldrums, as it did during the 1997-1998 financial crisis, the world's
> most populous country is instead developing into a major business
> competitor, depressing growth in nearby countries.
>
> During the previous crisis, neighbors looked to China, as well as to the
> United States, as locomotives to pull them out of trouble. This time, with
> the U.S. economy out of steam and Japan stalled as it has been for a
> decade, China's growth is blamed for drawing investment, business and jobs
> away from countries as far apart in distance and development as Japan is
> from Indonesia.
>
> "In the short run, China's emergence is triggering a second Asian economic
> crisis more severe than the first," said Kenichi Ohmae, the managing
> director of the business consultancy Ohmae Associates in Tokyo. "But
> unlike the currency speculators who triggered the 1997 crisis, China won't
> go away."
>
> China's phenomenal expansion - growth is expected to exceed 7 percent in
> 2001, as it has each year for much of the last generation - and huge
> domestic market are likely to get a further boost if the country joins the
> World Trade Organization in November, as expected. That would allow it to
> tap more fully into the global trading system.

etc. Very interesting article.



The story is told mainly from the perspective of anxiety in the little
tigers. But just as China avoided a competitive devaluation during the
Asian currency crisis in 1997, there is no reason to think that it will not
continue to cultivate its relations with the whole of east Asia tactfully,
so as to build up its influence over the next few decades.

Because China still has a centralised state system, it still has the
option, even within the WTO, of being competitive while having some control
over the largest features of the management of its national capital or
surplus. Perhaps it is for this mission that Jian Zemin wishes businessmen
to join the communist party.

Unless Japan finds a way to move ahead again soon, we could well see China
emerging as the most economically influential power in the whole of east
Asia by the end of the decade.

China is at present one of the few areas of the world in which there is
substantial growth. The ultimate threat is not to the little tigers, who
will be able to join in supplying a more prosperous and enomously large
regional mass market.

The real threat is to the dominance of the accumulated capital of the old
imperialist powers, the contradictions between which, China will gently and
persistently exploit.

The twenty-first century is unlikely to be America's century.

Chris Burford

London