Dependence and competition: trade relationship between Asian countries and China

ABSTRACT

This study examines two aspects of trade, dependence and competition, between China and Asian countries. The study first outlines China’s evolution from a small trading nation that is highly dependent on the Soviet Union to the world’s largest trading nation with a diversified trade structure. After being dependent on the Soviet Union during the 1950s, China was dependent on Japan in terms of trade from the 1970s to the 1990s. However, during the first two decades of the 21st century, the relationship between the two countries completely changed. This study further examines bilateral trade relationships of South Korea, Taiwan, Vietnam, Malaysia, Singapore, the Philippines, Indonesia, vis-à-vis China. The study shows that Asian countries have become increasingly dependent on China in terms of trade, at the expense of trade with their conventional partners, namely Japan and the United States. Intra-ASEAN trade is also eclipsed by the growth of trade with China. Additionally, the study reveals, competition in export markets between China and Asian countries has intensified. The high-income countries in Asia have been caught up by China, while the low-income countries are also facing increasing competitive pressure from China.

KEYWORDS:

• Trade
• China
• Asia
• dependence
• competition

Disclosure of potential conflicts of interest

No potential conflict of interest was reported by the author(s).

Notes

¹ Marukawa, “Bilateral Trade,” 452–453.

² Baviera, “Philippines–China Relations,” 3.

³ Hwang, “The Continuous but Rocky,” 3–5.

⁴ Do, “Vietnam and China,” 12.

⁵ Bank of Japan, “The Long-Term Trend,” 64.

⁶ Dong, “A Critique on Domestic,” 98–105.

⁷ Adler-Karlsson, “Western Economic Warfare”.

⁸ Lu, “A Brief Analysis,” 6.

⁹ Platte, “Japan–China Trade,” 114.

¹⁰ Zhang and van Witteloostuijn, “Economic Openness,” 260–1. The Herfindahl-Hirshman index is calculated as, where n denotes the number of trade partners, and σ denotes the share of exports of a specific country in total exports.

¹¹ Kojima, World Economy; Kunimoto, “Typology of Trade Intensity”.

¹² Kunimoto, “Typology of Trade Intensity,” 16–18.

¹³ Isard, “Location Theory”; Tinbergen, Shaping the World Economy.

¹⁴ Zhang and van Witteloostuijn, “Economic Openness”.

¹⁵ Marukawa, “The Economic Nexus,” 30–31.

¹⁶ See note 4 above, 9.

¹⁷ Sato, Indonesia, 119–120.

¹⁸ Ikebe, “East Asian”.

¹⁹ Hwang, “The Continuous but Rocky,” 4.

²⁰ Kumagai and Kuroiwa, “Export Upgrading,” 2–34.

²¹ Hausmann, Hwang and Rodrik, “What You Export,” 9–10.

²² In most cases, the 4-digit level classification fits with the common perception on what constitutes “an industry.” The 2-digit level classification such as HS87, which includes cars, trucks, tractors, and parts thereof, seems too broad to be regarded as a single industry, because the manufacturers of these items are not necessarily competing. The 6-digit level classification such as HS870322 (passenger cars with 1000–1500cc gasoline engines) seems too narrow because the manufacturers of such item are likely to be competing with those of other categories. The 4-digit level classification (HS8703, passenger cars) is the closest to the general perception on the arena of competition.

Additional information

Funding

This work was supported by the Japan Society for the Promotion of Science [16H02004].

Notes on contributors

Tomoo Marukawa

Tomoo Marukawa is a Professor of Chinese Economy at the Institute of Social Science, University of Tokyo. He has received the Ohira Masayoshi Memorial Prize in 2003. His works focuses on Chinese economy and industries. He has published seven books in Japan, includingContemporary Chinese Economy and several others on Chinese industries. He has also published articles on China's regional unemployment issues, sharing economy, Sino-Japanese economic relations, automobile and mobile phone industries in Economic Systems, Japanese Political Economy, Journal of East Asian Studies, China: An International Journal, Asia Pacific Business Review, Developing Economies, and Eurasian Geography and Economics.