口譯課文 Text for Interpretation
The irresistible lure of China as a globalproduction base will receive another boost from theremoval of more trade barriers following thecountry's accession to the World Trade Organization(WTO).1 While low production costs has long beenthe main advantage of setting up global-scalemanufacturing plants in China, the benefits have been curtailed by trade barriers and frequentconflicts among trading partners.
This sort of friction should be subdued under WTO surveillance, boosting trade flowsbetween China and the rest of the world. China's share of the global market has constantlyrisen in the past two decades, irrespective of the state of the global economy, reflecting thecountry's competitive edge in production.
Among the boons derived from WTO entry will be the opening of China's vast domesticmarket, providing a further incentive for foreign companies to base their plants in what willone day be the world's biggest domestic economy. From a logistics perspective, China is anideal location for large-scale manufacturing plants where the ideal balance betweendistribution costs and economies of scale can be realized.2 WTO entry will underline China'sstatus as the number one Asian location for production.
Foreign funds have long played an important role in expanding China's manufacturingbase. Foreign-invested firms' share of production/exports has risen substantially in the past twodecades.
This accelerating inflow of foreign direct investment (FDI) will continue to provide themain impetus behind China's transformation into a global production base. According toUnited Nations Commission on Trade and Development (UNCTAD) estimates, FDI into China willreach US$60 billion per year after WTO entry, rising to US$100 billion if full foreignownership of local firms is allowed3.
These estimates are not groundless, as shown by the 40-50% surge in contracted FDIsince the Sino-US agreement on WTO entry was signed.4 Although the formal entry dateremains undetermined (the latest estimate is 2001), foreign businesses are highly optimisticthat China will succeed. This is reflected by the pickup in contracted FDI, which reboundedstrongly 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 secondonly to the US as a destination for investment in 2001. This reinforces the UN's suggestionthat China will see a boom in FDI after WTO entry. In fact, the country so far has receivedmore than US$300 billion in FDI on a cumulative basis, more than the aggregate for the restof Asia.
The shift of Taiwan's manufacturing to the mainland will have a profound impact on theisland's economic development. Like Hong Kong in the 1980s, shifting the manufacturing baseacross the strait implies an inevitable transition in Taiwan's economy to a higher value-addedoutput structure. Hong Kong chose to evolve into a service-oriented economy, but whichdirection will Taiwan take?
Given that Taiwan's financial sector development remains well behind that of Hong Kong, itsprogress 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 ascompetition was relatively subdued then. Moreover, there will be substantial politicalresistance to Taiwan's transformation as it implies full integration with, as well as totalreliance on, the mainland for economic advancement.
Though it is difficult to envisage Taiwan's transformation towards a full service-orientedstructure, FDI trends suggest that the island's economy could take such a direction. The shareof FDI in service-based industries such as banking has increased rapidly in recent years. This, ofcourse, is associated with Taiwan's moves to liberalize the domestic financial andtelecommunication industries. Nevertheless, with the gradual shift of local manufacturing to themainland, 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&Dcapability and a large pool of expertise in the field. A gradual expansion of the service sectorwill also take place. While Taiwan is far from being a threat to Hong Kong in financial andprofessional services6, the transportation and logistics businesses could face fewerobstacles to development and compete with neighboring centers.
Though a shift towards more service elements is likely, we do not expect a completehollowing-out of Taiwanese industry. A closer parallel may be Japan's direct investment in theAsian region over the 1990s. Today, Japan remains relatively strong in manufacturing, and thethreat of hollowing-out has proved unfounded.
The difference between Hong Kong and Taiwan in terms of integration with China isevident in the strong ongoing investment in Taiwan's domestic industries, particularly foreigninvestment. The island's electronic industry has been upgraded to more advanced and highervalue-added production, whereas Hong Kong saw a complete divestment. Taiwan's inward directinvestment grew strongly in 2000, with the electronic industry remaining the largestbeneficiary. While a complete hollowing-out of local industry appears highly unlikely, arestructuring of Taiwan's economy as a result of further integration with the mainland isinevitable.
Taiwan's economic integration with the mainland will create challenges and problems forthree economies7 (including Hong Kong), but the potential gains, as proved by the case ofHong Kong, are tremendous. While the mainland will benefit from an upgraded industrialstructure – moving from light industrial products to more advanced electronic components andcomputer products/accessories – Taiwan should be revitalized by shifting to higher value-addedsectors as the economy matures. Although the transformation process will see structuralproblems such as persistently high unemployment and the need for heavy reinvestment innew 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 tothe global trade club is also imminent. Not only will Taiwan's trade and investment in themainland 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 industryacross the strait, while Hong Kong is gradually losing out, as more manufacturers rely on RMBloans offered by mainland banks. This explains the deviation between a strong export-ledrecovery in Hong Kong and sluggish domestic commercial loan growth. Hong Kong bankscan only recapitalize the market after establishing their RMB business in the mainland.
