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CATTI二级口译精讲第52讲讲义
口译课文 Text for Interpretation
The irresistible lure of China as a global production base will receive another boost from the removal of more trade barriers following the country's accession to the World Trade Organization (WTO).1 While low production costs has long been the main advantage of setting up global-scale manufacturing plants in China, the benefits have been curtailed by trade barriers and frequent conflicts among trading partners.
This sort of friction should be subdued under WTO surveillance, boosting trade flows between China and the rest of the world. China's share of the global market has constantly risen in the past two decades, irrespective of the state of the global economy, reflecting the country's competitive edge in production.
Among the boons derived from WTO entry will be the opening of China's vast domestic market, providing a further incentive for foreign companies to base their plants in what will one day be the world's biggest domestic economy. From a logistics perspective, China is an ideal location for large-scale manufacturing plants where the ideal balance between distribution costs and economies of scale can be realized.2 WTO entry will underline China's status as the number one Asian location for production.
Foreign funds have long played an important role in expanding China's manufacturing base. Foreign-invested firms' share of production/exports has risen substantially in the past two decades.
This accelerating inflow of foreign direct investment (FDI) will continue to provide the main impetus behind China's transformation into a global production base. According to United Nations Commission on Trade and Development (UNCTAD) estimates, FDI into China will reach US$60 billion per year after WTO entry, rising to US$100 billion if full foreign ownership of local firms is allowed3.
These estimates are not groundless, as shown by the 40-50% surge in contracted FDI since the Sino-US agreement on WTO entry was signed.4 Although the formal entry date remains undetermined (the latest estimate is 2001), foreign businesses are highly optimistic that China will succeed. This is reflected by the pickup in contracted FDI, which rebounded strongly from a decline in 2000 to a 21.3% rise in January.5
A recent survey covering the 1,000 biggest businesses in the world ranked China second only to the US as a destination for investment in 2001. This reinforces the UN's suggestion that China will see a boom in FDI after WTO entry. In fact, the country so far has received more than US$300 billion in FDI on a cumulative basis, more than the aggregate for the rest of Asia.
The shift of Taiwan's manufacturing to the mainland will have a profound impact on the island's economic development. Like Hong Kong in the 1980s, shifting the manufacturing base across the strait implies an inevitable transition in Taiwan's economy to a higher value-added output structure. Hong Kong chose to evolve into a service-oriented economy, but which direction will Taiwan take?
Given that Taiwan's financial sector development remains well behind that of Hong Kong, its progress will face severe external competition once the domestic market opens up further. In retrospect, Hong Kong was fortunate in its transformation to a service economy as competition was relatively subdued then. Moreover, there will be substantial political resistance to Taiwan's transformation as it implies full integration with, as well as total reliance on, the mainland for economic advancement.
Though it is difficult to envisage Taiwan's transformation towards a full service-oriented structure, FDI trends suggest that the island's economy could take such a direction. The share of FDI in service-based industries such as banking has increased rapidly in recent years. This, of course, is associated with Taiwan's moves to liberalize the domestic financial and telecommunication industries. Nevertheless, with the gradual shift of local manufacturing to the mainland, Taiwan faces strong economic pressure to pursue a more viable structure.
Taiwan is likely to focus primarily on high-tech production, drawing on its strong R&D capability and a large pool of expertise in the field. A gradual expansion of the service sector will also take place. While Taiwan is far from being a threat to Hong Kong in financial and professional services6, the transportation and logistics businesses could face fewer obstacles to development and compete with neighboring centers.
Though a shift towards more service elements is likely, we do not expect a complete hollowing-out of Taiwanese industry. A closer parallel may be Japan's direct investment in the Asian region over the 1990s. Today, Japan remains relatively strong in manufacturing, and the threat of hollowing-out has proved unfounded.
The difference between Hong Kong and Taiwan in terms of integration with China is evident in the strong ongoing investment in Taiwan's domestic industries, particularly foreign investment. The island's electronic industry has been upgraded to more advanced and higher value-added production, whereas Hong Kong saw a complete divestment. Taiwan's inward direct investment grew strongly in 2000, with the electronic industry remaining the largest beneficiary. While a complete hollowing-out of local industry appears highly unlikely, a restructuring of Taiwan's economy as a result of further integration with the mainland is inevitable.
Taiwan's economic integration with the mainland will create challenges and problems for three economies7 (including Hong Kong), but the potential gains, as proved by the case of Hong Kong, are tremendous. While the mainland will benefit from an upgraded industrial structure – moving from light industrial products to more advanced electronic components and computer products/accessories – Taiwan should be revitalized by shifting to higher value-added sectors as the economy matures. Although the transformation process will see structural problems such as persistently high unemployment and the need for heavy reinvestment in new sectors, its completion will unleash a huge wave of growth momentum.
Hong Kong is likely to face some challenges if Taiwan rapidly opens up its domestic sector, particularly its finance industry. Following China's entry to the WTO, the accession of Taiwan to the global trade club is also imminent. Not only will Taiwan's trade and investment in the mainland accelerate as restrictive practices are removed, its market will also be opened, making a successful economic transformation more likely.
Taiwan's finance industry enjoys the strong backing of its robust manufacturing industry across the strait, while Hong Kong is gradually losing out, as more manufacturers rely on RMB loans offered by mainland banks. This explains the deviation between a strong export-led recovery in Hong Kong and sluggish domestic commercial loan growth. Hong Kong banks can only recapitalize the market after establishing their RMB business in the mainland.
