Deniz Ünal-Kesenci

China’s Specialization in East Asian Production Sharing

Since 1980, China’s economy has grown at the rate of 9 percent a year and its foreign trade has expanded at the pace of almost 15 percent a year. Its share of world trade rose from less than 1 percent to about 5 percent in 2002.1 The emergence of China as a great economic and trade power is bringing far-reaching changes in the world economy and in international economic relations. China now holds a large share of the world market in traditional industries (accounting for about one-third of world exports in leather and shoes and one-fifth in clothing), but is also rapidly enlarging its shares in electrical and electronic exports, the fastest growing segments of world trade. In 2002 China recorded one-fifth of world exports of consumer electronics and of domestic appliances. For East Asian countries, China has become a major partner, often their first partner in the region. In 2003, China was Japan’s second-largest export market, behind the US, and its first-largest supplier. For South Korea, China was the largest export market and its second-largest supplier behind the US. In 2003 and 2004, the accelerated increase of China’s import demand (+40 percent and 37 percent respectively) has been the engine of economic growth in East Asia.