China's Growing Economic Role in Asia
Nicholas R. Lardy
China's future economic role in Asia-and no doubt it broader role as well-will be determined largely by its success in sustaining its decade-long program of economic reform and openness. Already, in the decade of the 1980s, China's economic role in the region rose dramatically. Whether this trend continues will depend on its ability to sustain a program of economic reform and on the future shape of the global and regional trading systems.
China's substantially increased economic role in Asia in the 1980s is reflected in its sharply higher levels of trade with countries in the region. Table 1 provides data on the growth of China's trade turnover in the aggregate and with selected Asian countries. The first point to note is that China's trade expansion, from under $40 billion in 1980 to more than $135 billion in 1991, averaged almost twelve percent per year in value terms. China's trade growth was more than twice that of world trade growth, and thus its share of world trade, although initially small, rose quite quicly. According to Secretariat of the General Agreement on Tariffs and Trade, in the 1980s China's rank as a trading country climbed more rapidly than any other country in the world.
Second, China's trade with several Asian countries rose impressively as well. Trade with Hong Kong rose twelvefold from $5 billion in 1980 to almost $65 billion in 1991. Trade with Japan grew impressively in the first half of the decade but then shrank in the second half. In 1991 strong bilateral trade growth resumed. Indirect trade relations with Taiwan and South Korea opened in the late 1970s, and trade grew to significant levels after the mid-1980s. By 1991 South Korea-China and Taiwan-China bilateral trade each reached $5.8 billion. Bilateral trade between China and Indonesia, while still relatively small, has also grown rapidly since direct trade relations were restored in 1985. The resumption of formal bilateral diplomatic relations in 1990 has further stimulated trade relations. Indeed, it would appear that China's growing trade with other Asian countries accounts for a very large share of the increased intraregional trade flows observed in East Asia in the 1980s.