ADBI series on Asian Economic Integration and Cooperation
Edited by Douglas H. Brooks and Susan F. Stone
Chapter 3: Transforming Trade Competition into Coordination with the People’s Republic of China
Li Shantong and Wang Huijiong INTRODUCTION 3.1 The economy and external trade of the People’s Republic of China (PRC) has experienced extremely rapid growth since the country began measures to reform and open itself to the outside world. The average annual growth rates of gross domestic product (GDP) and external trade were 9.8 percent and 17.4 percent, respectively, in 1978 and 2007.1 The growth rates of exports and imports in this period were 18.1 percent and 16.7 percent, respectively. The total amount of foreign capital actually utilized from 1979 to 2005 was US$745.3 billion, of which about 20 percent was foreign loans. The value of foreign direct investment (FDI) was approximately 75.4 percent, with the remaining 4.6 percent being comprised of other types of foreign investments. Mainland PRC and Hong Kong, China retained their positions as the largest FDI recipients in South, East and Southeast Asia in 2006. The structures of production and trade are also affected greatly by FDI. It is also necessary to point out the fact that the PRC is now becoming a source of FDI outflows from the region. It is pointed out in the World Investment Report 2007 (United Nations Conference on Trade and Development, UNCTAD 2007b) that FDI outflows from the region as a whole rose by 60 percent to US$103 billion. Outflows from Hong Kong, China, the largest source of FDI in the region, reached US$43 billion in 2006, while the PRC consolidated its position as a major investor, and...
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