Despite a rising challenge of global trade fragmentation, China remains a key part of the value chain in the Asia-Pacific region, chief economist of Asian Development Bank (ADB) Albert Park said in an exclusive interview with Xinhua.
China contributed 37.6 percent of the region’s total trade growth in goods, and 44.6 percent of total trade growth in services in 2022, according to the Asian Economic Integration Report 2023 recently released by the ADB.
“There is a lot of intermediate goods trade among countries in the Asia-Pacific, and China’s share of intermediate goods has been increasing over time. So, China is definitely still a key part of the supply chain relationships in the region,” Park said.
According to the report, regional trade integration continues to deepen, although the regional value chain displays stronger linkages in primary and low-technology sectors than in high-technology and business services.
“I think under the Regional Comprehensive Economic Partnership agreement, the supply chain relationships and the complexity of the supply chain relationship should increase over time,” Park added.
Whereas the European Union and North American intraregional trade shares have stagnated over the past three decades, Asia-Pacific’s intraregional trade has grown steadily, in part due to the weight of China, according to the report.
“Something unique about the Asia-Pacific is a commitment of a lot of governments in the region to be part of an open multilateral trading system and to integrate their economy with other economies of the region,” Park said.
Expressing confidence in the prospect of the Chinese economy, Park noted that China will reach the GDP growth target of around 5 percent this year.
“Even though there’s been a little bit of weakness in some of the April numbers, we still think that the recovery is on track,” he said, adding that the ADB will probably upgrade its forecast for China’s GDP growth when releasing its upcoming report in June, given that China’s economic performance in the first quarter was beyond market expectations.
Acknowledging that Chinese consumers have yet to fully regain their confidence, Park said he believes domestic demand will eventually see a boost. “There’s going to be recovery momentum in China just as we saw in other Asian countries after the pandemic as sentiment improved and demand came back.”
China has created the world’s largest and most dynamic middle-income group, with over 400 million people. In the next 15 years, the country’s middle-income group is expected to exceed 800 million, further driving the development of an enormous market.
“The Chinese market is so big now. Multinational companies who want to sell in China to this very large and growing market are going to have a strong interest in being here and producing for local customers,” Park said, noting that China will continue to be an attractive place for global businesses.