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MadeinChina
Almost every household in China has a mobile phone. In fact, China is now the world’s largest mobile phone market, both in demand and supply: 303 million mobile phones were produced in China in 2005, exceeding production levels in most OECD countries. However, as this year’s OECD Information Technology Outlook points out, mobile phones are not the only sector of information and communication technology (IT, also known as ICT) where China is making inroads.
That same year the country also churned out 81 million computers, taking second place as the world’s largest PC market, and it became the world’s third largest producer of semiconductors. This dizzying pace of output has brought down IT costs globally, and helped make IT products an integral part of daily life. In terms of spending, China now ranks sixth in the world IT market, making it important for exports from OECD-based firms.
The new economy is vibrant too. At the end of 2005, China had 111 million Internet users, up from 94 million in 2004. The number of broadband users stood at 64.3 million. By comparison, India, another IT giant with a similar population and considerable potential, only had roughly 35 million Internet users in 2004.
China’s staggering economic growth rate has stood at almost 10% for the last 20 years. One cause is strong exports underpinned by low production costs. Information and communication technology now claim the lion’s share of China’s export trade, accounting for approximately 30% of its exports in 2005. The year before, China ranked as the largest exporter of IT products, outstripping the EU, Japan and the US. Since 1996, China’s IT goods trade has been growing at almost 32% a year. China’s success in this market differs from that of its neighbours, Japan and Korea, in that China has long encouraged heavy inward investment. Though the government knows that labour-intensive and low value-added production is already inexpensive in China, it uses tax rebates and other financial incentives to lure foreign companies. Some 55% of China’s total exports are attributed to production and assembly-related activities, and 58% of these are driven by foreign enterprises, of which 38% are entirely foreign-owned. In fact, among the top 10 high-technology companies by revenue, not one of them is Chinese.
So what defines a product as “madeinChina”? After all, much of IT assembly takes place in China, with components often imported from Japan, Chinese Taipei, the US and Europe. The fact that assembly and final testing of goods may occur in third countries and that much of China’s IT trade is shipped through Hong Kong-China adds to the riddle. The discrepancy as to what “made in China” means is evidenced in trade figures published by the US and China: Chinese figures for IT exports to the US are 48% lower than US figures for IT imports from China. Both China and Japan recorded trade deficits in IT trade between themselves.
Almost every household in China has a mobile phone. In fact, China is now the world’s largest mobile phone market, both in demand and supply: 303 million mobile phones were produced in China in 2005, exceeding production levels in most OECD countries. However, as this year’s OECD Information Technology Outlook points out, mobile phones are not the only sector of information and communication technology (IT, also known as ICT) where China is making inroads.
That same year the country also churned out 81 million computers, taking second place as the world’s largest PC market, and it became the world’s third largest producer of semiconductors. This dizzying pace of output has brought down IT costs globally, and helped make IT products an integral part of daily life. In terms of spending, China now ranks sixth in the world IT market, making it important for exports from OECD-based firms.
The new economy is vibrant too. At the end of 2005, China had 111 million Internet users, up from 94 million in 2004. The number of broadband users stood at 64.3 million. By comparison, India, another IT giant with a similar population and considerable potential, only had roughly 35 million Internet users in 2004.
China’s staggering economic growth rate has stood at almost 10% for the last 20 years. One cause is strong exports underpinned by low production costs. Information and communication technology now claim the lion’s share of China’s export trade, accounting for approximately 30% of its exports in 2005. The year before, China ranked as the largest exporter of IT products, outstripping the EU, Japan and the US. Since 1996, China’s IT goods trade has been growing at almost 32% a year. China’s success in this market differs from that of its neighbours, Japan and Korea, in that China has long encouraged heavy inward investment. Though the government knows that labour-intensive and low value-added production is already inexpensive in China, it uses tax rebates and other financial incentives to lure foreign companies. Some 55% of China’s total exports are attributed to production and assembly-related activities, and 58% of these are driven by foreign enterprises, of which 38% are entirely foreign-owned. In fact, among the top 10 high-technology companies by revenue, not one of them is Chinese.
So what defines a product as “madeinChina”? After all, much of IT assembly takes place in China, with components often imported from Japan, Chinese Taipei, the US and Europe. The fact that assembly and final testing of goods may occur in third countries and that much of China’s IT trade is shipped through Hong Kong-China adds to the riddle. The discrepancy as to what “made in China” means is evidenced in trade figures published by the US and China: Chinese figures for IT exports to the US are 48% lower than US figures for IT imports from China. Both China and Japan recorded trade deficits in IT trade between themselves.