World Bank Report Focuses on East Asia Integration
The World Bank released a regional report covering East
Asia on June 6 in Singapore. According to the report,
East Asia faces three major challenges: maintaining income
growth and poverty reduction in a global economy, pursuing
recovery from the 1997 financial crisis and adapting to
China's emergence as a major world and regional trading
power.
The report, called East Asia Integrates,
says that the solution is to promote trade and investment
liberalization in the region. It argues that US$300 billion
could be saved through improved trade policies. Intra-asian
trade has already improved, and the Southeast Asian economies
have been able to maintain core sectors, even though many
businesses have relocated their factories from Southeast
Asia to China. China's joining WTO in November 2001 has
had a positive influence, including the elimination of
dual pricing, phasing out of restrictions on trading,
more uniform administrative arrangements and judicial
review.
According to the World Bank, every 1 percent productivity
gain in the services sector from expanded competition
and foreign entry implies welfare gains of US$10 billion
and a GDP increase of 2.2 percent. The report says that
the gain for the East Asian economies by the opening of
the China market subjectto international rules of conduct,
will more than outweigh the initial loss of industry to
China. China's imports are expected to grow from 3 percent
of global GDP in 2000, to more than 6 percent in 2005.
Main East Asian exports which will benefit are rubber,
sugar, urea and rice.
Because China is becoming a more important of manufacturing
networks, it will also export many partially completed
products to East Asia for completion in East Asian factories.
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