Economy

More value-added Chinese exports expected

By Zhang Chunyan and Zhang Haizhou (China Daily)
Updated: 2011-03-08 13:22

European experts anticipate more innovative goods

London - China's exports will shift from a goods-driven to a value-added model in the coming years, European analysts have said.

"China's biggest change I foresee in next few years is the transformation of 'made in China'," Ngaire Woods, director of the Global Economic Governance Programme at Oxford University, told China Daily.

Woods said "made in China" has meant produced in China but designed, patented, financed and marketed abroad.

"China is gradually 'patriating' each of these elements," she said. "In the future, 'made in China' will be like 'made in Italy' in the fashion industry."

She made the remarks before Saturday's opening of the annual session of China's National People's Congress.

The draft 12th Five-Year Program (2011-2015) is expected to be approved at the annual session of the country's top legislature. The plan is widely expected to contain measures to boost domestic consumption - a sign China is gradually steering its economy away from export- and investment-fueled growth.

"Increasingly, China is competing not just on cost in the export market but is moving up the value chain," Confederation of British Industry in China chief representative Guy Drury said.

China-Britain Business Council CEO Stephen Phillips said he believes it is a positive sign that the Chinese government is focusing on its domestic market in its 12th Five-Year Plan.

"This will help to achieve trade balance on a macro level," Phillips said.

Chinese exports play an important role in European business and consumption. Many Chinese products are daily essentials consumed in Europe, where they offer competitive prices and more choices.

But most Chinese exports use other countries' technological know-how. Drury pointed out that many parts for high-tech items are imported from abroad, assembled in China and then exported from China as finished products.

The Chinese government and companies should monitor the export balance transition, Jack Yu, international policy adviser on North Asia and Pacific of The Law Society of England and Wales, said.

Special Coverage: 'Made in China' - but for how long? Related readings:  China's foreign trade jumps 44% in Jan  Imports to get boost from cuts  Tax breaks aimed at helping service sector  Trade surplus 'to decrease more' in 2011

Chinese commerce officials have previously said China should improve its exports' competitiveness and pay more attention to intellectual property protection. They have also called for the establishment of Chinese distribution and marketing channels for more value-added goods.

"Although China has become the world's biggest exporter, our trade is plagued by various problems, one of which is related to quality and the relatively thin profits," Vice-Commerce Minister Zhong Shan said at the opening ceremony of the East China Fair on March 1 in Shanghai.

China's trade surplus fell 6.4 percent in 2010, with exports jumping 31.3 percent and imports surging 38.7 percent year-on-year, government figures show. China's trade grew robustly in January, when exports rose 37.7 percent and imports soared 51 percent.

Rodger Baker, vice-president of global intelligence company Strategic Intelligence, said: "Chinese goods are rising up the technology scale and competing with European goods."

As Yu put it: "It is interesting to watch the dynamics as Chinese companies move from 'made in China' to 'designed in China'."

Liu Yanqiu contributed to this story.

"If China were to shift toward an economy driven more by domestic consumption, this would both be good for the Chinese people and would contribute to global rebalancing. Such a move would very likely reduce tensions with major trading partners. Politically, the United States would need to distinguish between economically meaningless bilateral trade imbalance, which would likely remain, and the much more meaningful global balances." Philip Levy Resident scholar with American Development Institute

"The mention of key targets (in Premier Wen Jiabao's government work report), including (those) for major pollutants, is really important. It's clear from the range of policies endorsed in the 12th Five-Year Plan that the Chinese government takes energy and environmental issues very seriously and is planning to do a great deal of work under this new plan." Deborah Seligsohn World Resources Institute Special Adviser on Climate and Energy

"Our governments have set a target of reaching $100 billion in bilateral trade by 2015 and significantly increasing investment in both directions. More and more Chinese companies are making investments and establishing international headquarters in the UK. And more and more UK companies are working with Chinese partner companies in other countries around the world." Sebastian Wood The UK's Ambassador to China

"The 12th Five-Year Plan is very realistic. It is chartered with due care to transform China and equip the society with the essential tools to embrace the second half of the 21st century with ease. I am confident that the plan will charter the way for a more harmonious country and will consolidate the People's Republic of China's place as a prominent member of the international community." Murat Salim Esenli Turkish Ambassador to China

"May I congratulate China for its monumental rise to the second place in the world economy… It is an aspiration that Nigeria has expected for some time now. To underscore the importance of China to our economy, the Central Bank of Nigeria had recently added the Chinese currency – the yuan – to the basket of convertible currencies to the naira. " Aminu Wali Nigerian Ambassador to China