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The Trade Structure in East Asia
Spiral Pattern of Development and Triangular Trade
Structure as a Regional Manufacturing Platform
- from White Paper on International Economy and Trade 2005 -
RIETI BBL Seminar
July 19th 2005
Susumu OKAMOTO
Outline
1. Questions
2. Trade Structure in East Asian countries
3. Hypothesis – “Spiral Pattern of Development”
4. Quality of Trade goods
5. “Triangular Trade Structure”
6. Conclusion – Strengthening regional production
platform
2
1.Questions
Given that division of production process over the borders in
East Asia has been highly developed, we face the following
questions in analysis on East Asian economies;
Q1 How can we understand the sort of economic
dynamism and development in East Asia? Are the
conventional wisdoms such as “Flying-geese
pattern of development” in East Asia still valid?
Q2 How is trade relations in East Asia formed? Whether
is the economic structure in East Asia close in the
region or open to the external region?
3
2. Trade Structure in East Asian countries
4
Start with categorizing trade goods according to production stage
in order to reflect the economic structure in East Asia
Figure 1: Classification of trade data according to production stage
Category
Primary goods
Sub-category
Primary goods
Intermediate goods
Processed goods
Parts & Components
Final goods
Capital goods
Consumption goods
BEC code
BEC Title
111 Food and beverages, primary, mainly for industry
21 Industrial supplies, n.e.s., primary
31 Fuels and lubricants, primary
121 Food and beverages, processed, mainly for industry
22 Industrial supplies, n.e.s., processed
32 Fuels and lubricants, processed
42 Parts and accessories of capital goods, except transport equipment
53 Parts and accessories of transport equipment
41 Capital goods, except transport equipment
521 Other industrial transport equipment
112 Food and beverages, primary, mainly for household consumption
122 Food and beverages, processed, mainly for household consumption
51 Passenger motor cars
522 Other non-industrial transport equipment
61 Durable consumer goods n.e.s.
62 Semi-durable consumer goods n.e.s.
63 Non-durable consumer goods n.e.s.
Note : This classification table classifies all trade goods under 5 production stages, correlating BEC-classified trade goods
with SNA (System of National Account). In this table, "Capital goods" is a part of "Final goods" because trade transactions
are sorted out under the production stage, although SNA has different categories for Capital goods (Capital formation) and for
Final goods (Final consumption) respectively since SNA classifies commoditiy goods according to a main user (Producer and
Household).
5
Sources : Classification by Broad Economic Categories, UN Statistics Division, and Lemoine (2004)
Classification adopted is compatible to I-O Table as well as SNA categories,
expanding the capability for the future study.
Figure 2: Structure of Trade Industry Classification Table
I-O Table
Major division
Agriculture, Forestry
01
and Fishing
02 Mining
03 Food product
04 Textile product
Pulp, Paper and
05
Wood product
06 Chemical product
07
Petroleum, Coal
product
08 Ceramic product
Industry
Trade Industry
Classification Table
(SITC Rev.3)
Food product and
01 relating Agriculture,
Forestry and Fishing
02 Textile product
Pulp, Paper and Wood
03 and relating Agriculture,
Forestry and Fishing
Export
Country
Production
stage
(BEC)
Primary goods
Intermediate goods
Chemical product
04 (including plastic)
Processed goods
Petroleum, Coal product
05 and relating mining
Data
Parts&Components
Conversion
Ceramic product and
06
relating mining
Export
Import
Country
User
(SNA)
Producer
Intermediate input
Capital formation
09 Steel
10 Nonferrous metal
11 Metal product
12 General machinery
13 Electric machinery
14 Transport machinery
15 Precision machinery
16 Other manufactures
Steel, Nonferrous metal
07 and Metal product and
relating mining
08 General machinery
09 Electric machinery
Consumer electric
10
appliances
11 Transport machinery
12 Precision machinery
Miscellaneous goods and
13
toy
Final goods
Capital goods
Final goods
Household,
Government
Final consumption
6
The features of Japan’s trade structure indicate that Japan exports
domestically-produced Intermediate goods and Final goods, particularly P&C
and Capital goods. Distinctive is decline in the export’s share of Final goods.
Figure 3: Trade Structures in East Asian countries according to the production stage
Japan
0%
Export( 1980)
0.7%
Export( 1990)
0.4%
Export( 2003)
0.6%
20%
40%
24.7%
17.5%
60%
13.8%
28.2%
22.9%
20.7%
80%
32.5%
35.6%
32.6%
100%
23.6%
25.8%
20.4%
2.2%
Import( 1980)
Import( 1990)
Import( 2003)
Primary goods
58.7%
30.1%
19.9%
Processed goods
24.6%
31.8%
25.2%
15.3%
Parts&Components
6.4% 7.5%
13.2%
Capital goods
5.9% 8.6%
24.1%
26.4%
7
Consumption goods
China’s trade structure is a real contrast to Japan’s. Final goods dominates
exports of China, and in import dominant is Intermediate goods.
China
0%
Export ( 1990)
20%
23.2%
9.5%
Export ( 2003)
40%
16.9%
60%
4.1% 12.6%
15.1%
80%
100%
50.5%
23.8%
41.9%
2.3%
Import ( 1990)
Import ( 2003)
10.0%
37.9%
11.9%
Primary goods
16.1%
34.5%
Processed goods
27.2%
Parts&Components
Capital goods
27.8%
21.8%
8.2%
4.6%
Consumption goods
8
Korea and Taiwan show the middle feature of the trade structure between
Japan and China. It is conceivable that these two economies are in the
course of transforming assembly production type like China into overall
production type like Japan.
Korea
0%
Export( 1980)
3.0%
Export( 1990)
1.3%
Export( 2003)
0.4%
20%
30.2%
25.1%
40%
8.7%
60%
11.4%
15.8%
27.3%
80%
100%
46.7%
16.7%
41.2%
28.0%
26.8%
17.5%
2.6%
48.0%
Import(1980)
26.6%
Import(1990)
19.6%
32.5%
Import( 2003)
19.5%
33.0%
Primary goods
Processed goods
Parts&Components
16.6%
23.0%
Capital goods
8.5%
25.4%
15.3%
14.3%
5.9%
9.2%
Consumption goods
9
Taiwan
0%
20%
Export( 1990)
40%
27.6%
60%
16.9%
80%
19.0%
100%
35.7%
0.8%
Export( 2003)
30.2%
33.9%
23.4%
12.2%
0.4%
Import( 1990)
Import( 2003)
16.3%
13.3%
Primary goods
37.2%
29.2%
Processed goods
17.9%
28.3%
Parts&Components
Capital goods
17.6%
20.7%
11.1%
8.6%
Consumption goods
10
The countries of ASEAN4 have the high shares of Intermediate goods in
both export and import.
Thailand has a feature of a high share of Final goods in export, in
particular Consumption goods.
Thailand
0%
Export ( 1980)
Export ( 1990)
20%
18.6%
20.8%
8.0%
20.3%
Import ( 1980)
30.5%
Import ( 2003)
10.1%
Primary goods
11.3%
100%
43.6%
10.6%
49.3%
20.2%
32.1%
11.8%
40.1%
21.6%
33.1%
Processed goods
80%
5.9%
1.1%
22.1%
37.1%
14.5%
60%
30.8%
Export ( 2003) 5.2%
Import ( 1990)
40%
Parts&Components
26.0%
Capital goods
9.7%
21.7%
18.1%
8.0%
9.5%
8.3%
Consumption goods
11
P&C has a high share in Malaysia.
Malaysia
0%
20%
Export( 1980)
40%
60%
46.9%
Export( 1990)
23.9%
Export( 2003) 4.5%
80%
31.4%
28.0%
21.5%
19.5%
12.1%
11.0%
39.5%
2.0%
100%
7.6%
17.7%
24.3%
10.1%
16.4%
Import ( 1980)
15.1%
Import ( 1990) 4.7%
Import ( 2003) 5.2%
Primary goods
18.0%
34.8%
30.4%
23.9%
Processed goods
26.0%
15.6%
27.5%
47.9%
Parts&Components
11.4%
15.0%
Capital goods
7.9%
Consumption goods
12
P&C has a high share in the Philippines.
Philippines
0%
20%
40%
60%
80%
100%
1.4%
Export( 1980)
Export( 1990)
Export( 2003)
26.4%
8.6%
33.6%
24.5%
6.9%
17.8%
11.6%
27.1%
8.0%
41.1%
55.6%
21.8%
13.5%
2.3%
Import ( 1980)
34.6%
Import ( 1990)
Import(2003)
38.7%
20.7%
9.9%
Primary goods
10.5%
34.5%
25.8%
Processed goods
15.6%
48.8%
Parts&Components
Capital goods
15.4%
14.4%
5.1%
10.6%
7.9% 7.7%
Consumption goods
13
Processed goods has a high share in Indonesia.
These features of the ASEAN countries reflect that Processed goods
such as Textiles, Pulp and Paper in Indonesia and P&C such as
Electric Machinery and Consumer Electric Appliances in the Philippines
and Malaysia are in active trade.
Indonesia
0%
20%
40%
Export( 1980)
50.4%
18.7%
12.2%
Import( 2003)
Primary goods
1.2%
0.8%
42.7%
23.7%
9.1%
37.2%
Processed goods
9.2%
8.5%
42.4%
20.3%
100%
0.7% 0.1%
3.2%
25.2%
29.4%
Import( 1980)
Import( 1990)
80%
70.8%
Export( 1990)
Export( 2003)
60%
15.2%
46.1%
Parts&Components
18.2%
20.2%
17.9%
28.4%
13.5%
Capital goods
7.4%
7.1%
12.6%
7.6%
Consumption goods 14
Findings
1. The analysis indicates that there are
distinctive aspects in the trade structures
of Japan, NIEs, China and ASEAN from
a viewpoint of production stage.
2. It also implies the possibility that East
Asia forms a complementary economic
region with assembly production type and
intermediate goods-specialized
production type of the economy.
15
3. Hypothesis – “Spiral Pattern of Development”
16
Needs to reflect the highly
advanced division of production
process.
Analyze the trade structure with the
consideration of spread of production
network in the region.
Figure 3: How to read the Chart of International Competitiveness Index
2nd Quadrant
1st Quadrant
Assembly Production Type
International
Competitiveness in
Final goods
Intermediate goods with weak Int’l
Competitiveness but Final goods with strong
Strong Int’l Competitiveness
Weak
②
Import Intermediate goods and
export assembled Final goods
Both Intermediate and Final
goods with weak Int’l
Competitiveness
①
⑤
Imports of both Intermediate and
Final goods exceed exports
Differential goods Production Type
Overall Production Type
Both Intermediate and Final goods with
strong Int’l Competitiveness
③
④
Exports of both Intermediate
and Final goods exceed import
Intermediate goods with strong Int’l
Competitiveness but Final goods
with weak Int’l Competitiveness
Export Intermediate goods and
Import Final goods as trade balance
Intermediate goods-specialized Production Type
3rd Quadrant
Weak
Strong
4th Quadrant
International
Competitiveness in
Intermediate goods
Note: International Competitiveness Index (ICI) = (Export – Import) / (Export + Import)
17
Figure 4: Hypothesis of Spiral Pattern Development Model
①
Industrial
Pattern
Location in Chart
of Int’l
Competitiveness
Index
Domestic
market
Production
Type
Third
Quadrant
②
Second
Quadrant
③
Overall
Production
Type
First
Quadrant
④
Intermediate
goodsspecialized
Production
Type
⑤
Wage/Income
Domestic demands for both Intermediate and Final goods exceed
domestic productions. The industry has week Int’l Competitiveness.
Fourth
Quadrant
HIGH
Third
Quadrant
Development stage in the industry
Tech level
LOW
Assembly
Production
Type
Differential
goods
Production
Type
Added value
Development of capital accumulation and introduction of foreign
technology makes the assembly process in the industry stronger in
Int’l Competitiveness. The industry imports Intermediate goods
because it does not have production technology for key Parts &
Components. Industrial structure of so-called assembly production
type is established.
In the course of the assembly production, the industry advances
technology and then starts to produce key Parts & Components. The
industry, acquiring Int’l Competitiveness in both Intermediate and
Final goods, comes to the ripening period.
Due to the constraints like rising labor cost, the industry loses
comparative advantage in the assembly process which weakens Int’l
Competitiveness in Final goods. Focusing on key Parts &
Components with advanced technologies, the industry retains Int’l
Competitiveness in Intermediate goods.
The industry loses Int’l Competitiveness in Intermediate goods. It
does not, however, mean the industry loses competitiveness
completely. In general, the industry competes in both domestic and
world markets by specializing the differential product with high
quality and high function, utilizing the advanced technologies as well
as the established brand names.
Note: The number from ① to ⑤ corresponds to the same number respectively shown in Figure 2.
18
Figure 5: View showing a frame format of Spiral Pattern Development
High Added value
Wage
Technology level
2nd Quadrant
⑤
②
s
es
n
e
tiv
i
t
e s
p
m od
o
o
C
’l al g
t
In Fin
Weak
in
1st Quadrant
③
④
Strong
Low
①
3rd Quadrant
Strong
Weak
4th Quadrant
Int’l Competitiveness
in Intermediate goods
Note: The number from ① to ⑤ corresponds to the same number respectively shown in Figure 2 and 3.
19
Figure 6: International Competitiveness Index – Industry
Textile
PH(00)
PH(90)
PH(80)
TH(90)
PH(03)
IN(80)
MY(90)
CH(00) CH(90) IN(00)
TH(00) 1.0
CH(03)
TH(03)
MY(00)
IN(90)
MY(03)
MY(80)
IN(03)
KR(80)
TH(80)
KR(90)
KR(00)
0.5
TW(90)
TW(00)
TW(03)
Final
KR(03)
0.0
-1.0
-0.5
0.0
0.5
1.0
JP(80)
Spiral Pattern Development
is observed.
-0.5
JP(90)
JP(03)
JP(00)
-1.0
Intermediate
Note: JP: Japan, KR: Korea, CH: China, TW: Taiwan, TH: Thailand, MY: Malaysia, IN: Indonesia, PH: Philippines
20
Steel, Nonferrous metal and Metal product
As the competitiveness of each
country has complementarily
changed, Spiral Pattern
Development is observed.
1.0
CH(03)
CH(00)
TW(03)
CH(90)
TW(00)
CH(90)
KR(80)
JP(90)
IN(00)
KR(00)
TH(00)
TH(03)
JP(80)
0.5
IN(03)
KR(90)
Final
KR(03)
0.0
-1.0
-0.5
0.0
0.5
PH(00)
TH(90)
MY(00)
JP(00)
TH(80)
MY(03)
PH(03)
MY(90)
1.0
JP(03)
IN(90)
-0.5
PH(90)
MY(80)
PH(80)
IN(80)
-1.0
Intermediate
Note: JP: Japan, KR: Korea, CH: China, TW: Taiwan, TH: Thailand, MY: Malaysia, IN: Indonesia, PH: Philippines
21
Chemicals
1.0
CH(00)
TW(90)
CH(03)
0.5
IN(00)
Final
No country is placed in Overall
Production Type. Complementarity is
formed between the countries in
Assembly Production Type and the ones
in Intermediate goods-specialized
Production Type.
TW(00)
IN(03)
IN(90)
TW(03)
JP(90)
0.0
-1.0
-0.5
0.0
JP(80)
KR(00)
MY(00)
KR(03)
CH(90)
KR(80)
MY(90)
TH(03) MY(03)
KR(90)
TH(00)-0.5
JP(03)
0.5
1.0
JP(00)
PH(00)
PH(80)
PH(03)
PH(90)
TH(90)
MY(80)
TH(80)
IN(80)
-1.0
Intermediate
22
Note: JP: Japan, KR: Korea, CH: China, TW: Taiwan, TH: Thailand, MY: Malaysia, IN: Indonesia, PH: Philippines
Electric Machinery
1.0
Although Japan's competitiveness
has weakend, in East Asia there
are many countries with strong
competitiveness in both
Intermediate and Final goods
JP(90)
KR(03)
0.5
CH(00)
CH(03)
Final
MY(00)
KR(80) TW(90)
TH(00)
-1.0
JP(80)
IN(00)
IN(03)
TH(03)
CH(90)
-0.5
PH(03)
PH(00) JP(00)
MY(03)
JP(03)
KR(00)
TW(03)
0.0
0.0
TW(00)
KR(90)
MY(90)
TH(90)
PH(90)
0.5
1.0
MY(80)
-0.5
TH(80)
IN(90)
IN(80)
PH(80)
-1.0
Intermediate
23
Note: JP: Japan, KR: Korea, CH: China, TW: Taiwan, TH: Thailand, MY: Malaysia, IN: Indonesia, PH: Philippines
Transport Machinery
Spiral Pattern Development
is partially observed.
1.0
KR(00)
JP(80)
KR(03)
JP(03)
JP(00)
JP(90)
0.5
TH(03)
TH(00)
Final
KR(90)
TW(03)
CH(00)
0.0
-1.0
-0.5
TW(00)
0.5
0.0
1.0
TW(90)
CH(03)
-0.5
IN(03)
CH(90)
TH(90)
TH(80)
IN(80) IN(90)
IN(00)
PH(90)
PH(80)
KR(80)
PH(03)
MY(00)
MY(90)
MY(03)
PH(00)
MY(80)-1.0
Intermediate
24
Note: JP: Japan, KR: Korea, CH: China, TW: Taiwan, TH: Thailand, MY: Malaysia, IN: Indonesia, PH: Philippines
Miscellaneous goods and Toy
CH(00)
CH(03)
IN(03)
IN(00)
CH(90)
KR(80)
TW(90)
TH(00)
TH(03)
PH(00)
KR(90) PH(90)
PH(80)
MY(00)
TW(00)
TH(90)
0.5
IN(90)
MY(03)
TW(03)
JP(80)
TH(80)
1.0
PH(03)
Final
KR(00)
JP(90)
MY(90)
0.0
-1.0
-0.5
0.0
0.5
KR(03)
1.0
JP(00)
MY(80)
-0.5
IN(80)
No country is placed in 3rd Quadrant,
which indicates East Asia as a whole has
strong competitiveness of Overall
Production in Miscellaneous goods. Spiral
Pattern Development is observed.
JP(03)
-1.0
Intermediate
25
Note: JP: Japan, KR: Korea, CH: China, TW: Taiwan, TH: Thailand, MY: Malaysia, IN: Indonesia, PH: Philippines
Figure 7: International Competitiveness Index – Country
Japan
1.0
CE(80)
CE(90)
TM(03) EM(90) TM(80)
PM(90)
ST(80)
GM(90)
TM(00) TM(90)
GM(80)
PM(80)
ST(90)
GM(00) GM(03) EM(80)
CE(03)
MT(80)
CE(00)
PM(03)
EM(03) EM(00)
PM(00)
CR(80)
No industry in 2nd
Quadrant.
0.5
Final
CR(90)
MT(90)
CH(90)
0.0
-1.0
-0.5
PP(90)
PP(00)
PP(80)
0.0
0.5
CH(03)
ST(00)
CH(00)
CH(80)
ST(03)
MT(00)
CR(00)
TX(80)
MT(03)
-0.5
CR(03)
PP(03)
FD(80)
FD(03)
TX(90)
FD(90)
FD(00)
TX(03)
1.0
Many industries with
strong competitiveness
in Intermediate goods.
TX(00)
-1.0
Intermediate
26
Note: FD: Food, TX: Textile, PP: Pulp, Paper and Wood, CH: Chemicals, CR: Ceramics, ST: Steel, Nonferrous metal and Metal, GM:
General Machinery, EM: Electric Machinery, CE: Consumer Electric Appliances, TM: Transport Machinery, PM: Precision Machinery, MT:
Miscellaneous goods and Toy.
China
Many industries
with strong
competitiveness
in Final goods.
PP(90)
CH(00)
FD(03)
FD(00)
CH(03)
EM(03)
Final
CR(00)
MT(03)
TX(00)
CR(90)
TX(03)
CR(03) MT(00)
CE(03)
ST(00) TX(90)
CE(00)
MT(90)
ST(90)
FD(90)
CE(90)
PP(03)
PP(00)
ST(03)
1.0
0.5
EM(00)
PM(00)
PM(90)
TM(00)
0.0
-1.0
-0.5
TM(03)
EM(90)
0.0
GM(03)
GM(00)
0.5
1.0
CH(90)
PM(03)
-0.5
GM(90)
No industry in 4th Quadrant.
TM(90)
-1.0
Intermediate
Note: FD: Food, TX: Textile, PP: Pulp, Paper and Wood, CH: Chemicals, CR: Ceramics, ST: Steel, Nonferrous metal
and Metal, GM: General Machinery, EM: Electric Machinery, CE: Consumer Electric Appliances, TM: Transport 27
Machinery, PM: Precision Machinery, MT: Miscellaneous goods and Toy.
Korea
1.0
PP(90)
MT(80)
TM(00)
ST(00)
FD(80)
Final
FD(90)
ST(80)
PP(00)
0.5
TX(80)
TX(90)
TM(03)
CE(03)
MT(90)
CR(80)
PP(80)
CE(90)
CE(80)
CE(00)
EM(03)
ST(90)
CR(90) EM(00)
EM(80)
PM(03)
ST(03) GM(00)
MT(00)
TM(90)
GM(03)
PP(03)
TX(00)
TX(03)
0.0
-1.0
-0.5
0.0
EM(90)
FD(00)
CR(00)
0.5
1.0
CH(03)
CH(80)
CR(03)
FD(03)
PM(00)
CH(90)
GM(90)
MT(03)
CH(00)
PM(80)
-0.5
PM(90)
Korea shows the middle features
between Japan's and China's features.
TM(80)
GM(80)
-1.0
Intermediate
Note: FD: Food, TX: Textile, PP: Pulp, Paper and Wood, CH: Chemicals, CR: Ceramics, ST: Steel, Nonferrous metal
28
and Metal, GM: General Machinery, EM: Electric Machinery, CE: Consumer Electric Appliances, TM: Transport
Machinery, PM: Precision Machinery, MT: Miscellaneous goods and Toy.
Thailand
Competitiveness in the
specialized industries has
strengthen.
Final
ST(03)
-1.0
1.0
TX(00)
TX(03) CR(03) CR(00) TX(80)
TX(90)
FD(80)
CR(90)
MT(03) MT(00)
FD(00)
PP(80)
PP(03)
CE(00)
FD(03) PP(00)
FD(90)
MT(90)
PP(90) 0.5
CE(03)
ST(00)
MT(80)
TM(03)
GM(00)
CE(90)
TM(00)
-0.5
EM(00)
EM(03) 0.0
GM(03)
0.0
0.5
1.0
PM(00)
ST(90)
EM(90) CH(03)
ST(80)
CR(80)
PM(03)
-0.5
CH(00)
GM(90)
CH(90)
TM(90)
TM(80)
CH(80)
GM(80)
PM(90)
CE(80)
EM(80)
PM(80)
-1.0
Intermediate
Note: FD: Food, TX: Textile, PP: Pulp, Paper and Wood, CH: Chemicals, CR: Ceramics, ST: Steel, Nonferrous metal
29
and Metal, GM: General Machinery, EM: Electric Machinery, CE: Consumer Electric Appliances, TM: Transport
Machinery, PM: Precision Machinery, MT: Miscellaneous goods and Toy.
Findings
The comprehensive judgment through this analysis
concludes that in East Asia;
a) Japan, NIEs, China and ASEAN have
different strengths so that complementarity in
the region as a whole is observed.
b) Besides the complementarity is not static but
dynamically changing along with economic
growth as well as the level of production
technology.
30
4. Quality of Trade goods
31
Figure 8: Change of Unit Price in High Tech Products Trade
0%
Japan(1995)
10%
30%
20.2%
8.7%
50%
7.8%
70%
21.4%
28.2%
100%
9.1%
15.2%
34.0%
43.7%
36.9%
32.0%
35.8%
c) Competitiveness among
ASEAN and China is low.
38.5%
43.1%
32.1%
5.3%
Thailand(1995)
16.0%
Thailand(2003)
16.0%
14.9%
34.0%
7.4%
29.8%
36.2%
36.2%
4.3%
Malaysia(1995)
10.0% 7.1%
Malaysia(2003)
17.1%
Indonesia(1995)
Indonesia(2003)
9.9%
20.0%
11.4%
11.9%
27.1%
14.9%
6.9%
25.7%
35.7%
22.9%
21.4%
31.7%
15.8%
27.1%
31.7%
31.7%
19.8%
4.3%
Philippine(1995)
24.3%
Philippine(2003)
22.9%
18.6%
11.4%
2.0 or more
24.3%
12.9%
1.5∼2.0
35.7%
1.0∼1.5
0.5∼1.0
a) Japan keeps competitive
advantage among East Asian
countries.
b) The share of relatively highpriced goods produced in
China is not large.
42.7%
40.8%
Korea(2003) 7.3% 6.4% 11.0%
90%
19.2%
32.0%
11.0%
80%
32.3%
27.3%
12.6% 2.9% 11.7%
Korea(1995) 5.5% 9.2%
60%
23.2%
14.1%
19.4%
China(2003)
2.9% 1.9%
2.9% 3.9%
13.6%
Taiwan(1995)
Taiwan(2003)
40%
15.2%
24.2%
Japan(2003)
China(1995)
20%
28.6%
17.1%
0.5 or less
d) There is a possibility that
ASEAN members produce
relatively high-priced goods
mainly for trade in the region.
Note: This graph shows the share of Unit Price Index,
the ratio of (Export unit price)/(Import unit price) for
each high tech product. More than 1 of the value of
Unit Price Index indicates that the country exports the
product with more highly added value in comparison
with the import goods. Therefore, if the country has a
large share of the items with 1 or more of the value of
Unit Price Index, it focuses on the higher value-added
32
products in domestic production.
5. “Triangular Trade Structure”
33
Figure 9: Change of Trade Value in Triangular Trade Structure
Japan, NIEs
0
20
40
China, ASEAN
60
80
100
120
140
160
1990
2003
Primary
Processed
P&C
Increase of
Intermediate exports
Capital
Consump.
China, ASEAN
0
Primary
20
40
60
80
Japan, NIEs
100
120
140
160
1990
2003
Processed
P&C
Capital
Consump.
Increase of
Intermediate exports
34
China, ASEAN
0
20
40
60
80
US, EU
100
120
$bil
140
160
1990
2003
Primary
Processed
Increase of Final, particularly
Consumption, exports
P&C
Capital
Consump.
Japan, NIEs
0
Primary
20
40
60
US, EU
80
100
120
140
160
1990
2003
Processed
P&C
Increase of both
Intermediate and
Final exports
Capital
Consump.
35
Findings
From the graphs above, it is observed that;
a)Reciprocal trade of intermediate goods between
Japan/NIEs and China/ASEAN has risen.
b)Significant growth of export in final goods,
particularly consumption goods, from
China/ASEAN to US/EU.
c) Steady growth in export of intermediate and
final goods from Japan/NIEs to US/EU.
36
Figure 10: Model of Triangular Trade Structure
US, EU (Final consumption)
Final goods
Capital formation by
producer
Consumption
goods
Consumption by household
and government
Ex
F i p or
t h n a l t of
e m go
ark ods
ets to
Capital goods
China, ASEAN (Assembly)
Final goods
Capital goods
Consumption
goods
Final goods
production by
assembling
parts
Intermediate
goods
Processed
goods
Parts &
Components
Labor-intensive
Process
Development of division of process in East Asia
Japan, NIEs (Parts production)
Export of Intermediate
goods to the countries
with labor-intensive
process
Intermediate
goods
Processed
goods
Intermediate goods
production with highly
added value
Parts &
Components
Capital-intensive
Process
37
a) Trade value in Triangular Trade Structure has increased.
b) The share of TTS in the total trade value has also risen. Compared to the
level of 1990, it increases more than double.
Figure 11: Change of Trade Value in Triangular Trade Structure
40%
Trade value in TTS ($bil.)
Share of TTS in total trade value
500
30%
400
23.1%
19.2%
300
20%
16.7%
200
447
11.7%
322
10%
208
100
85
0
0%
1990
1995
2000
2003
Notes: “Value of Triangular Trade” = (Intermediate goods export of Japan & NIEs to China & ASEAN) +
(Final goods export of China & ASEAN to US & EU)
“Share of Triangular Trade Structure in total trade” = (Value of Triangular Trade) / (All goods export of
Japan & NIEs to World + All goods export of China & ASEAN to World)
38
Figure 12: Change of Triangular Trade Index for the Industry
0.00
0.05
0.10
0.15
0.20
0.25
0.30
Food product
Textile product
Pulp, Paper and wood
1990
2003
In almost all the
industries except Food
and Transport Machinery,
TTS has been intensified.
Chemical product
Ceramic product
Steel, Nonferrous metal
General machinery
TTS has been formed
across the industries.
Electric machinery
Counsumer electric
appliances
China・ASEAN
ηi =
Transport machinery
Int i Japan・NIEs
Int
World
i Japan・NIEs
US・EU
×
Fini China・ASEAN
World
Fini China・ASEAN
Precision machinery
IM
Miscellaneous goods
and toy
Total
Inti EX
: The value of export of Intermediate goods in
“i” industry from EX (exporter) to IM (importer)
IM
Fini EX : The value of export of Final goods in “i”
industry from EX (exporter) to IM (importer)
39
Figure 13: Trend of Local Contents in China and ASEAN Region for the Industry
0
5
Ceramic product
Steel, Nonferrous metal
General machinery
Electric machinery
Precision machinery
30
35
1990
2003
While local production of
intermediate goods
advances, TTS strengthen.
0.17
0.33
0.98
0.07
0.18
0.34
2.66
0.84
0.60
8.31
24.29
0.10
0.66
2.14
1.87
7.12
Miscellaneous goods
and toy
Total
25
1.81
2.61
Counsumer electric
appliances
Transport machinery
20
2.55
4.11
Textile product
0.04
Chemical product
15
10.10
8.13
Food product
Pulp, Paper and wood
10
31.45
1.08
1.50
Export of intermediate
goods from Japan/NIEs
converges towards
China/ASEAN, and export of
Final goods from
China/ASEAN to US/EU
rises comparatively.
Note: Local Contents Index = (All goods export of China & ASEAN to World) / (Intermediate
goods export of China & ASEAN to World)
40
Figure 14: Relative Change of Unit Price in Triangular Trade Structure
Japan
China
[Intermediate goods]
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1.9%
1995-2000
2000-2003
35.2%
8.6%
4.3%
37.7%
10.5% 6.2%
40.1%
8.0%
4.00 or more
2.00-4.00
44.4%
1.00-2.00
0.50-1.00
0.25-0.50
3.1%
0.25 or less
China
US
[Final goods]
0%
10%
1995-2000 5.6%
20%
9.8%
2000-2003 6.0% 6.4%
4.00 or more
30%
40%
50%
60%
38.3%
80%
29.3%
39.1%
2.00-4.00
70%
36.5%
1.00-2.00
0.50-1.00
0.25-0.50
Unit prices of intermediate goods
of Japan’s export to China as well
as final goods of China’s export to
US have risen.
90%
6.8%
100%
10.2%
5.6% 6.4%
0.25 or less
Not only economic relationship
between East Asia and US/EU
through trade has deepened,
but sophistication of TTS has
also progressed, reflecting high
growth in East Asian economic
region.
Notes: The upper graph compares the change in Unit
Price of Machinery Intermediate goods export of Japan to
China with the change in Unit Price of Machinery
Intermediate goods export of Japan to World. If the rate of
rise in Unit Price of Japan’s export to China exceeds the
rate of rise in Unit Price of Japan’s export to World, the
number of the comparative change becomes more than 1.
Also the lower graph compares the change in Unit Price
of Machinery Intermediate goods export of China to US
with the change in Unit Price of Machinery Intermediate
goods export of China to World. Further details41
are
explained in the text of the paper.
Figure 15: Comparison of Unit Prices in Export of Japan to US and in Export of China to US
0%
10%
20%
Processed
(1995)
Processed
(2003)
P&C(1995)
P&C(2003)
30%
50%
60%
41.7%
25.0%
41.7%
25.0%
70%
29.4%
15.6%
17.2%
65.6%
22.0%
56.1%
34.1%
46.3%
Total(1995)
55.2%
Total(2003)
55.7%
4 times or more
100%
The number of the item of
Japan’s export with the higher
unit price exceeds the one of
China’s overwhelmingly.
23.5%
60.2%
Capital(2003)
90%
8.3%
35.3%
23.5%
80%
12.5%
23.5%
35.3%
Capital(1995)
Consumption
(1995)
Consumption
(2003)
40%
18.6%
22.9%
4 to 2
15.6%
8.6%
19.5%
9.8%
16.7%
10.5%
While both Japan’s export to US
and China’s export to US rise,
the same items with different
add-values for each are traded
in these two trade relations.
2 to 1
Notes: Unit Price Index = (Unit Price of Japan’s export to US) / (Unit Price of China’s export to US)
42
3 categories of the bar in the above graph are based on the number of the items.
Figure 16: Comparison of Unit Prices in Export of Japan to China and in Export of China to Japan
0%
Processed
(1995)
Processed
(2003)
10%
20%
Consumption
(1995)
Consumption
(2003)
Total(1995)
Total(2003)
50%
60%
70%
28.3%
35.8%
22.1%
18.3%
25.0%
41.3%
31.2%
33.3%
13.0%
27.8%
25.9%
28.7%
39.5%
4 to 2
The share of the items with higher
unit prices of Japan’s export to
China than the ones of China’s
export to Japan is dominant.
Even when Japan and China trade
categorically same products, such
products have different added
values.
15.8%
30.7%
4 or more
18.3%
14.5%
35.2%
42.4%
100%
15.2%
37.7%
37.0%
90%
18.9%
51.9%
35.2%
80%
15.1%
26.4%
50.0%
P&C(2003)
Capital(2003)
40%
35.8%
P&C(1995)
Capital(1995)
30%
18.1%
2 to 1
Note: Unit Price Index = (Unit Price of Japan’s export to China) / (Unit Price of China’s export to Japan)
3 categories in the bar of the above graph are based on the number of the items.
43
6. Conclusion
Strengthening regional production platform
1. The observed “Spiral Pattern of Development” suggests that
the region where production network has spread over the
borders such as East Asia needs analysis with consideration
of production stage.
2. The complementarity in East Asia across the industries not
just exists but changes dynamically rather than statically.
3. While the complementarity in the region has heightens,
“Triangular Trade Structure” is formed between East Asia and
US/EU.
4. Advancement of TTS is a fruit of both development of
supporting industries in East Asia and increasing depth in the
capital-intensive industrial bases.
5. TTS is not exclusive in East Asian region but becomes the
source of dynamism to tug the growth in world economy
through promoting trade relation with US/EU.
44
Thank you!
Correspondence
Ministry of Economy, Trade and Industry
Email: [email protected]
Tel: +81-3-3501-1679
Fax: +81-3-3501-7697
45
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