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CHINA: Its role in world trade and shipping

China, considered the world's biggest emerging market, has one of the fastest growing economies in the world.

Double digit growth has been recorded in each of the last three years and Gross Domestic Product (GDP) growth in the first quarter of 1995 was 11.2 percent.

Projections for the whole of 1995 suggest that GDP growth will register at around 10.5 percent.

China and World Shipping: An Analysis of the Impact of China on the World's Maritime Industries, is the title of the latest report from Drewry Shipping Consultants.

The report, which is part of a series of regular economic surveys of the shipping industry, was excerpted for this article.

It is likely that China will remain a dynamically growing economy for the remainder of the decade and this scenario will have significant implications not only for the Asia-Pacific region, but also, in a wider context, for the industrialized nations of the Organization for Economic Cooperation and Development (OECD). China's long-term economic potential is enormous.

The remarkable growth of the Chinese economy during the last decade has had an incisive impact on international trade and shipping. The explosion in Chinese seaborne trade in both the liner and bulk tramp trades has in part been responsible for sustaining the freight markets.

China is also playing an increasingly important role in the shipbuilding market, and was until recently a major player in the world demolition market. China, as well as being a major user of shipping services, is also an important operator of both liner and tramp shipping. There are massive terminal developments taking place which will influence the direction and pattern of t r a n s s h i p m e n t trades.

FOREIGN TRADE Within the Pacific Rim trading group, China is second only to Japan as an exporter and to Japan and Hong Kong as an importer. The latter is, of course, an important conduit for Chinese trade. China clearly also has the capacity to become increasingly more important as a dri ving force behind inter-regional and, more significantly, world trade. Given China's desire to secure foreign currency, export growth will doubtlessly continue at a rapid rate. Parallel acceleration in imports is also probable, considering the eagerness of western countries to supply a vast population beginning to develop as a consumer society. China now has substantial trading surpluses with the world's three largest trading groups. This success has been based on the export of low value consumer goods. As technology improves, China will also become more involved in the export of higher value consumer goods. SEABORNE TRADE The Chinese economy has been a major factor behind the growth of Pacific Rim and world trade.

Providing China is able to maintain its impressive rate of economic growth, the remainder of the 1990s should see China become an increasingly important driver of world dry bulk trade — this will be particularly true of the iron ore, coal and grain trades.

The outlook for the oil trades is less clear since China has a voracious appetite for energy, as befits a country with a population of 1.2 billion. The key to resolving China's oil trade deficit is a new infrastructure which, if developed, could lessen China's growing reliance on imports and help make the country self-reliant.

SHIPPING The Chinese controlled fleet is the fifth largest in the world with more than 23 million gt. If the Chinese and Hong Kong fleets are combined, they form the world's third largest fleet (a large proportion of the Hong Kong fleet is not beneficially owned by Chinese interests). China Ocean Shipping Co. (Cosco) is the third largest shipowning group in the world. The Chinese fleet has grown primarily through secondhand acquisitions and, to a lesser extent, through newbuildings. Dry bulk carriers are the preferred vessel type in terms of carrying capacity. But when looking at sheer vessel numbers, general cargo ships are the most popular, as they offer flexible trading opportunities both in Chinese coastal and river trades, and also within the Asia-Pacific region.

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