MALAYSIA, by emphasising on education and technology, and encouraging small and medium-size enterprises (SMEs), has adopted the most appropriate stance in the current global trade scenario, where China is rapidly becoming the dominant trading power in Asia, according to Time magazine senior editor (business and technology) Jim Erickson.
Hong Kong-based Erickson, speaking at a luncheon in Kuala Lumpur yesterday, explained that Asian nations, especially from South East Asia, instead of fearing China becoming a dominant trading power, should rather endeavour to establish links with it as such a move could well aid their economies in turn.
“In this respect, Malaysia has taken the right step as by encouraging and promoting a class of entrepreneurs, the country need not depend too heavily on traditional business or investment flows. Instead it could well create its own business (environment),” he told StarBiz.
He noted that in the 1980s, au-tomakers in the US transferred much of the work to countries in the south as a result of the North American free trade agreement (Nafta), which led to predictions that the US economy would suffer.
“Instead, what happened was the creation of entrepreneurs like Bill Gates and Microsoft, as well as Apple and Intel, and which led to the explosion in technology growth as we now know it,” he said.
Erickson said it was true that China’s economy had grown tremendously in the last few years, with more than 60 million of its population presently having a per capita income of over US$12,000 annually, an automobile market the size of Germany’s and which was expected to account for a quarter of world auto sales within the next five year.
China has also overtaken South Korea as the largest trading partner of the US.
“China doesn’t need the kind of products put out by South East Asian countries, like shoes or clothing or cheap electronic products. What it does need is lots of natural resources like rubber, palm oil, technology and the relevant expertise as well as investments,” he said.
In fact, Erickson said, Asian sales to China was predicted to increase as much as 85% by 2005, the equivalent of US$70bil, a prime example being South Korea, which had increased exports to China by 29% in 2002.
He said the rise of industrial China would need many new relationships; and that the signals coming out of China were positive, as China well understood that it need inflows of foreign capital, both human and financial, to stave off social unrest.
“China realises well it needs enormous amounts of foreign investment and has indicated that it is willing to make the necessary and relevant changes to its (internal) systems in order to accommodate the inflows necessary to maintain economic growth at the 7% or 8% level,” Erickson said.
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