Emerging China and Its Impact

In 1970s World has witnessed two oil crises.Especially Japan was seriously damaged among the developed countries by the first oil crisis happened in 1973.But Japan has overcome economic difficulties by inducing hi-tech in the industries.By this Japan has easily got around the second oil crisis in 1979.Japan, overcoming two oil crises, is looked upon as “Japan as No.1”around 1980.After this, Japan, strengthening international competitiveness by inducing hi-tech is adding up the surplus in the current balance which is the largest in the world.On the otherhand America is worried by“twin deficits”, that is to say, the deficits in trade and the federal budget.The solution of international imbalance between two countries is aimed to adjust yen-dollar currency at the Plaza Hotel in Washington in 1985.On this opportunity Japanese firms deployed their production facilities all over the world.Especially Asian countries have earnestly introduced many Japanese export-oriented firms, by which Asian countries have enjoyed high economic growth as long as over twenties years until 1997 when Asian currency crisis happened.After this especially ASEAN among Asian countries are obliged to lower economic growth.Taking the place of ASEAN, China which has been introducing voluminous foreign capitals since Industrial Reforms and Open-Door Policy starting in 1979, has enjoyed almost two-digit economic growth over twenties years. At 2005 China ranks No.4 in the world in terms of GDP scale.At the previous 2004 China has become No.3 both in the world export and import respectively.Driving on this good performance, China is further aiming to be a global power after America using export expansion as a lever.To realize the purpose China needs overseas market and the infrastructure to support each other, both of which are sides as a coin.China is now building both steadily. China is driving forward towards industrialization, which is symbolized by one of the leading exporters both of machinery and IT goods.America is the largest export destination for China.For this China needs parts, intermediates goods and capital goods to support export.The main suppliers of these goods are East Asian countries.The import ratio of East Asian countries in the total Chinese import is increasing so rapidly especially in the machinery and IT goods parts. Responding to this the other East Asian countries including Japan are strengthening export to China which is playing a roll as “magnetic place” in the intraregional trade. China is making her presence felt not only in the Asian intraregional trade but also in the world trade.On its process China is inducing structural changes which might influence all over the world.Of the on-going structural changes, the most important is to take the place of Japan especially both in the Asian intraregional trade and Pacific trade.This paper is to analyze the changing status of emerging China and the mechanism to supersede Japan.