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STRATFOR.com
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China and the Wal-Mart Effect
November 6, 2001
Summary
Southeast Asian countries are facing a dramatic export slowdown and increasing competition from China. Trade tensions will grow after Beijing joins the World Trade Organization, with its neighbors turning to protectionist measures to counter China's growing dominance.
Analysis
One of the few bright spots at the World Trade Organization's Ministerial Conference in Qatar Nov. 9-13 may be the formal adoption of China's membership agreement. The deal will pave the way for the world's second-largest economy to join the 140-plus-member body late this year or in early 2002. But it's likely to be a rough start.
Southeast Asian economies are already suffering from a sharp decline in exports and the growing threat of deflation. China's entry into the WTO will heighten trade tensions in Asia, with regional governments likely resorting to protectionist measures to counter Beijing's strength. This will lead to even sharper conflicts, and a trade war may break out in the short term.
As the region's largest power prepares to officially join the mainstream of global trade, Southeast Asia is watching China's efforts with a mixture of hope and trepidation. Countries such as South Korea and Thailand are counting on China's WTO membership to open lucrative markets and reduce Beijing's system of subsidies and trade barriers.
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(Story Source)
(c) 2001 Stratfor, Inc.
Dan
China and the Wal-Mart Effect . . .