t: 020 7219 8155 e: fieldm@parliament.uk

China – The New Economic Superpower?

August 14, 2003

China - The New Economic Superpower?

I believe that, over the next decade or so, China will become the world’s second economic superpower. The European Union, unless it fundamentally reforms its backward-looking ways, will never be able to rival the USA despite the rhetoric of some of its leaders. China looms large in its capacity to e…

China - The New Economic Superpower?

I believe that, over the next decade or so, China will become the world’s second economic superpower. The European Union, unless it fundamentally reforms its backward-looking ways, will never be able to rival the USA despite the rhetoric of some of its leaders. China looms large in its capacity to expand economically and I am constantly kept aware of these developments through my regular constituency contacts in Chinatown which is located in the Soho district of my parliamentary seat.

Recently our own Prime Minster had an almost non-visit to China and one can only hope that he has not misread all the signs of China’s development. We made the same mistake in ignoring the Japanese "miracle" in the past and paid a huge price in terms of loss of manufacturing capacity and jobs.

China today should be talked of in the same breath as Japan but in many quarters it is not happening. I am shocked when I talk to some businessmen to hear how many disavow the Japanese miracle because of that country’s last decade of fiscal stagnation but Japan is still the second largest economy after the US and is a massively powerful trader across the globe. China is beginning to push its way into Japan’s export markets and also battling for the same oil production to run its growing manufacturing operations. This is now a battle of two giants.

According to a recent Japanese government energy study it is predicted that by the end of this year China will overtake Japan as the world’s biggest consumer of crude oil after the United States. Much of that oil will be driving China’s increasing manufacturing operations and export drive to every country in the world.

We in Britain have long recognised the cheapness of China’s mass-manufactured goods with the attendant poor quality but the same was said of Japanese goods in the 1950s before that country taught the world about the importance of quality and regular increase in profitability that could be achieved through quality management.

Today no one can compete on price with Chinese manufactured goods and China is looking to dominate the industrial power of the Far East in the way Japan currently does, all it needs now is a focus on quality and that is starting.

The Chinese currency, renminbi (people’s money), is controlled by its government and its rate remains artificially weak allowing China to sell, sell, sell as they say. Twenty per cent of America’s £375 billion trade deficit is with China and there is a growing imbalance here in the UK.

China is on a course, politically, technically and economically to elbow its way to super power status. Japan recognises it in its dealing with oil producers such as Iran, Russia and others. The US recognises it with its trade deficit. The UK with its long time enthusiasm for buying cheap goods from wherever in the world had better start waking up to the fact that diplomatic dealings with China should reflect the changing world in which we live.