China, as host to the 2008 Summer Olympics, has taken the spotlight this month and the nation has put a lot of effort into presenting itself in the best light. In the course of 30 years, China has steadily moved away from the Cultural Revolution, toward becoming one of the primary economic powers in the world.
A few statistics from the U.S.-China Business Council demonstrate the pace at which trade with China has increased in the past 10 years. In 1998, China’s exports to the rest of the world totaled USD 183.8 billion and imports totaled USD 140.2 billion. In 2007, exports had increased to USD 1218.0 billion and imports totaled USD 955.8 billion.
Coincidentally, electrical machinery and equipment and power generation equipment ranked number 1 and 2 on the lists of China’s exports and imports for 2007. The United States was China’s top trading partner for 2007, followed by Japan. The greatest volume of exports went to the United States, followed by Hong Kong and Japan; the greatest volume of imports came from Japan, with the United States ranking fourth.
Many in the paper and forest products industries were early visionaries who recognized the value of doing business with and in China. Among the top 10 U.S. exports to China in 2007, pulp and paperboard ranked 10th, accounting for USD 2.05 billion, or a little more than 3% of total volume. China became the third largest export market for U.S. wood products in 2004, after Canada and Japan. That year, nearly 80% of U.S. wood exports, in the form of hardwood logs, lumber, and veneer for furniture and interior decorating, went to China. Roughly half the recovered paper exported by the United States goes to China, also.
But even China has felt the effects of the lending crisis, the slowdown in the housing markets, and increases in oil and food prices.
The Xinhua News Agency reported a couple weeks ago that China’s reliance on foreign trade had exceeded 60%. Rising prices for imported crude oil, grain, and iron ore have added to inflationary pressures in China. A Reuters report last week noted that China’s exports growth “has slowed because of weaker overseas demand, and investment growth has weakened because banks are less willing to lend.” In addition, economic growth for the first half of 2008 slowed to 10.4%, compared with 11.9% growth for all of 2007, and lately the U.S dollar has been gaining against the Chinese yuan.
When the Beijing Olympic Games end, many people will have gotten to know more about China and will likely view it as an energetic nation that has quickly developed into an economic leader. Look a little deeper, and you will see social, political, and economic issues — both internal and external — that China must face as it continues to evolve and the balance of world power shifts a bit more to the Far East.