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ECONOMY: China Triples Output as New Industrial Powerhouse

Thalif Deen

UNITED NATIONS, Nov 7 2006 (IPS) - The world’s fastest growing developing nations, including China, India and South Africa, contributed significantly to the rise in world industrial output last year, according to the Vienna-based U.N. Industrial Development Organisation (UNIDO).

“The most remarkable has been the transformation of China into an industrial powerhouse with its share of world industrial output tripling over the past 15 years,” says UNIDO Director-General Kandeh Yumkella.

But “less encouraging”, he told delegates last week, “has been the share of sub-Saharan Africa in world industrial output, which has remained stagnant at less than one percent.”

Over a 23-year period, China’s share in world industrial output rose from 2.2 percent to 6.9 percent; India’s share increased from 0.9 percent to 1.2 percent; while South Africa remained stagnant at 0.5 percent.

Brazil registered a decline in industrial output from 2.5 to 2.1 percent, but still remained in the world’s top 10 economies, ahead of Canada (1.9 percent), according to the latest figures released by UNIDO.

South Korea and Mexico, two developing countries which have joined the ranks of industrial nations and are now members of the Paris-based Organisation for Economic Cooperation and Development (OECD), had 3.4 percent and 1.1 percent share of world industrial output respectively – although they were not in the top 10 back in 1990.

The impact of China’s economic and export growth on international product markets and trade flows is already visible, and according to a recent OECD survey, China is now set to lead world exports by 2010.

Currently, the largest share of world industrial output is held by the United States (23.3 percent), followed by Japan (18.2 percent) and Germany (7.4 percent). China ranks fourth with 6.9 percent.

Yumkella said a major challenge in industrial development cooperation is how to make trade work better for the poor.

“It is well known that many countries – especially the 50 least developed countries (LDCs) – have failed to reap significant benefits from new market opportunities offered by the global trading system,” he said.

This, he argued, is not always due to tariff and non-tariff barriers, but often to the lack of productive capacity needed to ensure the necessary quantity and quality of supply.

He said this was also related to the inability to prove conformity of their potential export products with international standards and the problems they face with integration into the multilateral trading system.

Yumkella also pointed out that there are now more than 100,000 such products and process standards which developing countries must meet in order to access foreign markets. And that number is growing every day.

In 2004, for example, 1.7 billion dollars worth of exports from developing countries were “disrupted” due to non-compliances with food safety requirements.

In recent years, however, there has also been a “steady growth” in South-South trade in commodities and manufactures.

“The industrial landscape is shifting gradually towards new patterns of global interdependence – along the traditional North-South axis but increasingly towards a South-South axis,” he added.

According to the UNIDO study, South-South trade in manufactured goods has recorded particularly strong growth, with manufactured exports growing at an annual average rate of 18 percent during 1965-2003, about twice the rate of growth of agricultural exports and total world exports.

“A number of developing countries have valuable knowledge and technical capacities that are particularly relevant for (other) developing countries, and are willing to share these to enable other developing countries to strengthen their technical and business capacities, and thereby increase their effective participation in the global economy,” the report notes.

A new initiative involves the establishment of South-South technical cooperation centres at the country level in several emerging economies. The primary objective is to foster South-South cooperation in the sphere of industrial development.

UNIDO has already concluded agreements with the governments of China and India for establishing Centres for South-South Industrial Cooperation in Beijing and New Delhi.

Currently, there are also ongoing negotiations to create such centres in Brazil, Egypt, and South Africa. These centres will help identify and mobilise resources required for projects and programmes within the framework of South-South cooperation.