Chinese Economic Outlook

The Chinese economy is poised for growth. It has been for sometime. While the world economy is hurting, the Chinese are ready to turn up the heat in 2003. That's good news for U.S. corporations with a stake in China, but not so good news for U.S. jobs, according to a recent report released by Economy.com. Here are a few exerts from the report.

"China’s development as an export-oriented global manufacturing hub strongly benefits corporations that are taking advantage of the lower cost structure. Moreover, increased margins benefit these companies’ investors, and lower prices are a boon to consumers. However, the gains are coming at the expense of U.S. manufacturing jobs at both ends of the value-added chain."

"The U.S. trade deficit with China, which will grow in coming years, is cause for concern. Politically, a mounting trade deficit with China may very well spark a domestic backlash and concomitant protectionist sentiments. This has broad implications for U.S. economic policy as did the trade deficit with Japan during the 1980s. China’s rapid march up the export value-added chain, which has already resulted in the capture of significant market share in downstream electronics, will also inevitably reach mainstays of U.S. high-tech manufacturing such as semiconductors and telecom equipment."

Chinese industries, like textiles, clothing and other light manufactured goods, have historically made their mark in overseas markets. As a new and increasingly powerful generation of higher technology industries move into place in China, we can expect greater market competition in the future in areas like scientific equipment, office machines and motor vehicles. Remember the mid to late 1970s and how the Japanese gained a huge foothold in the U.S. market? Could the Chinese be planning the same over the next 3-5 years? What impact will these developments have on local economies across America? That is an issue worthy of our attention.

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