Abstract
In the long run globalization may be beneficial to the countries involved, but for this to be realized, the problems it creates have to be overcome. To do so is, however, difficult when a large but poor country like China is integrated to the global economy. In the first 15 years, its East Asian neighbours were able to manage the problems, but in the past several years, because Chinese exports diversified into more sophisticated products and because they have not been doing as well as before the economic crisis, Chinese competition has become a serious problem. In Southeast Asia, it is threatening the leading industrial sectors such as household appliances and electronic products, whereas in Northeast Asia it is increasing the rate of unemployment by wiping out mature industries and mature processes. Chinese competition will certainly make it more difficult for Southeast Asian countries such as Malaysia to rely on industrialization for economic growth, and cause serious problems to the localities that have relied for their development on the industries that are now in trouble. But the region is in a better position than Northeast Asian countries in adjusting to Chinese competition because it can develop resource-based industries and certain services it can develop resource-based industries and certain services (such as tourism). On the other hand, while Northeast Asian countries have the industries that benefit from the rise of China because they have technological supeririority or established brand names, such industries are not creating enough jobs to absorb the workers who are being laid of by declining industries. The solution is to expand the service sector, but this is difficult because they have already reached a high-income level and because their cultures are too local to meet the needs of potential service-importers. It seems that it is the Northeast Asian countries rather than Southeast Asian countries who will be in bigger trouble as a result of Chinese competition.
Published by:
Penerbit UKM
Universiti Kebangsaan Malaysia
43600, Bangi, Selangor,
Malaysia.
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