Since the beginning of this year, the world economy has continued to show good growth momentum. The United States is still the main force leading the world economic growth. Under the dual stimulus of fiscal and monetary policies, production and investment activities in the United States have continued to expand, consumer spending has grown steadily, and the job market has escaped from a prolonged downturn. Driven by strong domestic demand and exports, the Japanese economy also continued to recover strongly, with higher corporate earnings, increased investment in equipment and a rebound in personal consumption, adding positive factors to world economic growth. Economic growth in the euro area was consolidated, with varying degrees of improvement in investment, production, consumption and trade, contributing to economic growth within the euro area and, in turn, to growth in the world economy. Developing countries, particularly those in Asia, have been the most dynamic regions of the world economy, influenced by the improved overall global environment. In conclusion, despite the continuing risks of high oil prices, new inflationary pressures, uneven development of major economies and geopolitics, the momentum of world economic growth will be sustained this year, supported by a variety of favorable factors, and may become the fastest growing year in the last 20 years. It is expected that the global economic growth in 2004 can reach about 4.8%, and the increase of international trade will be more than 7%.
I, the current world economic growth in the need to pay attention to the "three high" risk
(a) high oil prices on the world economic growth constitutes the damage
This year, the international market, the price of crude oil rising, the first half of the price of oil from last year's average of 30 U.S. dollars a barrel rose to more than 40 U.S. dollars. In early June, the price of oil rose to a record high of 42 U.S. dollars, a record high since 1983. High oil prices are affected by a variety of factors. First, the Organization of Petroleum Exporting Countries (OPEC) has repeatedly adjusted production. OPEC decided to reduce the ceiling of crude oil production by 1 million barrels per day since April. This sent shockwaves through the market, leading to a surge in oil prices. The Organization of the Petroleum Exporting Countries had to agree on June 3 to increase crude oil production to meet market demand, and from August onwards to produce an additional 500,000 barrels per day to combat rising energy prices, the price of oil has only slightly back to the level of about 38 U.S. dollars per barrel. However, the Global Energy Research Center predicts that the overall level of oil prices will remain high in the second half of the year. Secondly, it is due to geopolitical risks. This year, the situation in the Middle East is still unstable, Iraq's oil reserves accounted for the world's first, but its domestic war is not extinguished, the market is worried about the transfer of power, the internal political situation is difficult to stabilize, the end of the turmoil is far away. The tough stance of Israel's Sharon government and the ruling Likud group has made people increasingly worried about the future of the Palestinian situation. In Saudi Arabia, a major oil-producing country, a spate of terrorist incidents targeting foreigners and government institutions has also signaled to the world the potential risks in the supply of crude oil from the Middle East. It is estimated that the risk premium for crude oil due to the unstable situation in the Middle East amounts to 5-10 dollars. Third, as the world economy heats up, the demand for crude oil in major countries increases. The International Energy Organization predicts that global oil demand will hit a 16-year high this year. From the perspective of energy consumption, the United States ranks first among industrialized countries, and May-June is again the traditional peak of oil consumption in the United States. In Asia, due to the very high economic growth rate and the high energy consumption characteristics of the economy, the growth rate of oil demand is very high. China has become the world's second largest oil importer, last year's daily crude oil demand of 5.5 million barrels, more than Japan. This year the International Energy Agency has again revised upward the growth of China's daily oil demand. India's demand for oil is also growing at an average annual rate of 10%. Asia accounts for 90 percent of global oil demand growth.
Rising oil prices will hurt global economic growth. It will hurt the economies of both developed and developing countries. The International Monetary Fund (IMF) reports that a $15 increase in oil prices in a year would directly reduce world economic growth by 1 percent. If oil prices continue to remain high at around $40 per barrel, economic growth in the United States will be reduced by 0.3 percentage points. The report published by the International Energy Agency points out that every $10 rise in oil prices will reduce global economic growth by 0.5 percentage points, and the overall economic growth rate in Asia by 0.8 percentage points. 12 countries in the euro zone need more than 70% of the oil relies on imports, rising oil prices lead to rising production costs, profits fell, but also to the euro zone has brought the pressure of inflation for the euro zone is in a period of economic recovery, oil prices are not gospel. As oil prices soar, global inflationary pressures are increasing. Natural gas and coal prices are also rising. These movements will also have a direct impact on the prices of chemical products.
(ii) High world primary product prices weaken the momentum of economic recovery
With the world economy entering a rapid recovery track, raw materials and fuels and other primary products, the market demand has increased significantly, and prices have risen significantly. This has led to higher production costs in the manufacturing sector, while posing an inflationary risk. According to WTO statistics, in 2003, the global average price of fuels rose by 16%, and the price of non-fuel primary products rose by 7%, of which the price of metals rose by 12%. Given the importance of manufacturing in the economies of Asian countries and regions, higher prices for primary commodities have already driven up prices. Rising raw material prices and the depreciation of the United States dollar have caused consumer prices in the United States to rise at an annualized rate of 5.1 per cent in the first three months of 2004, considerably higher than the 1.9 per cent recorded for 2003 as a whole. The reasons for the sharp climb or turnaround in the prices of many commodities on the international market are manifold.
One is due to the world economy, especially the U.S. economic recovery accelerated by the impact of the surge in market demand, coupled with a number of product inventories declined, the supply was tight, the world's non-ferrous metal prices have soared, and some commodities, such as tin and other prices and even more up to its highest level in 14 years, the overall level of non-ferrous metal prices have risen to a new high in 9 years. South Korea, Japan, China and other Asian countries on the demand for steel surged, especially the three shipbuilding enterprises in 2004, the completion of new ships will hit record highs, the demand for thick steel plate is particularly large, causing the price of thick steel plate rose rapidly, has risen to the highest price since 1998, the overall price level of steel has exceeded the 500 U.S. dollars per ton mark.
The second is due to the adverse effects of climate, 2003/04 annual world soybean production will be reduced by 4.8% over the previous year, the United States soybean production will be reduced by 12.3%, the world's soybeans and soybean oil prices then appeared to surge, and even have risen up to its highest level of its history and the highest price of 20 years. Because of the Philippines, Indonesia, production reduction in the first half of 2004, the global coconut oil market is also expected to appear about 300,000 tons of supply gap.
Third, the price of raw materials or upstream products, to a certain extent, to drive and support the semi-finished products, finished products or downstream product prices. Such as rising crude oil prices led to some petrochemical products such as ethylene, naphtha, gasoline and polyvinyl chloride prices; natural rubber prices led to higher tire prices; scrap, coke and iron sand prices, to a certain extent, also exacerbated the rise in steel prices.
(C) higher interest rates increase the cost of world economic recovery
The U.S. Federal Reserve has cut interest rates for 13 consecutive times since 2001, with short-term interest rates dropping from 6.5 percent to the current 1 percent. As the U.S. economy recovers and grows strongly ---- with three consecutive quarters of GDP growth around 4 percent and an inflation level of 4.4 percent in April, the 1 percent interest rate level is no longer appropriate for the United States. The Federal Reserve raised interest rates by 0.25 percentage points at the June 30 purpose monetary policy meeting. It is expected that the U.S. federal funds rate will be raised from 1% to 3% within one year, and the U.S. home loan interest rate will rise from 5.5% to 7.5%. The interest rate hike will not only have an impact on investment, stock market, consumption and the exchange value of the US dollar in the United States, but will also have a far-reaching impact on the world economy and international direct investment.
First of all, higher interest rates will increase the cost of financing for enterprises and damage the real estate and stock markets. Against the backdrop of ultra-low interest rates in the United States, U.S. institutional investors buying stocks in other countries are beginning to return to the U.S. dollar, which in turn affects the world's financial markets. In anticipation of the US interest rate hike, the Tokyo market and the yen exchange rate have fallen sharply so far this year. Stock markets in other parts of Asia are also falling (major stock indices in Hong Kong, Taiwan, South Korea and Singapore have fallen into the low range since the beginning of the year. Hong Kong's Hang Seng Index is down 17%, Taiwan's weighted index is down 16%, and South Korea's Composite Index is down 15%). Latin American stocks and currency markets have also sank.
Second, world capital flows are changing because of predictions that the U.S. will raise interest rates. The widening interest rate differential between Japan and the U.S. could also intensify the shift of funds from Japan to the U.S. Fear of interest rate hikes has increased the cost of raising funds, and some funds are being withdrawn and bonds are softening in emerging markets.
The increase in interest rates will raise the cost of attracting funds to developing countries and regions as emerging market countries received US$140 billion in foreign investment in 2003, and may therefore increase the debt burden of developing countries.
Third, the United States interest rate increase from the theoretical analysis should lead to the rise of the dollar exchange rate. But from the past decade or so, 1988-1989, the U.S. federal funds rate rose from 7% to 10%, 1999 2000, interest rates rose from 5% to 6.5%, the dollar exchange rate is rising; and 1994-1995 interest rates rose from 3% to 6%, the dollar exchange rate fell to a historic low. Therefore, it is difficult to judge the trend of the dollar by a single interest rate trend, and the main thing to look at is the trade situation and other economic indicators. As things stand, the trade deficit will remain a drag on the dollar, and if the U.S. trade deficit widens as the U.S. economy grows and the U.S. is unable to offset the widening deficit, there will still be depreciation pressure on the dollar. The dollar's recovery in the past few months has been based on expectations of a U.S. interest rate hike.
Fourth, higher interest rates do not pose a significant threat to Asia as it is already anticipated that the US will raise rates, and not by much. However, with inflation on the rise, Asian countries are likely to follow the US in raising interest rates. This will also affect their economies and the inflow of foreign capital. Rising interest rates in industrialized countries and financial difficulties from rapidly rising debt in emerging market countries will weaken the global economy.
Two, the current world economic situation on China's impact
(A) the world economy's improvement and international trade rebound for China's exports to provide a good external environment
Since this year, China's import and export trade is still maintaining a rapid growth, the first five months of export growth of 33.4 percent. Among them, China's exports to the three major markets of the U.S., Europe and Japan grew by 33.3%, 38.4% and 22.0% respectively year-on-year.
1, with the further recovery of the U.S. economy, the domestic investment demand to further pull, enterprises on the procurement of means of production will increase significantly, thus bringing opportunities for China's exports of related products. From January to May this year, China's exports to the United States 43.23 billion U.S. dollars, an increase of 33.3%. Among them, industrial manufactured goods increased by 36.2%, and the export of machinery and transportation equipment increased by the largest 47.9%. China's trade surplus with the U.S. in January-May 2004 was 24.09 billion U.S. dollars, an increase of 30% year-on-year.
Despite the fact that the U.S. economy is still doing well, how to secure full employment is still an important issue, with 2.7 million unemployed in the manufacturing sector at present. To serve the election politics, for the support of the manufacturing industry has obviously become the most urgent need of the U.S. Democratic Party and *** and both parties. Color TV, furniture, textiles and clothing are manufacturing industries, and the bilateral trade imbalance between China and the United States is still prominent, the United States with this anti-dumping lawsuits against China's cases continue to occur, is expected to be around the second half of the trade friction generated by political issues will continue.
2, January-May Sino-Japanese bilateral trade showed rapid growth momentum. Japan's exports to China rose 33.8%, 14.8%, 22.8% and 18.8% respectively over the same period last year. Japan's domestic demand revitalized, the demand for imports will gradually increase. And China is now Japan's largest importer, will certainly benefit from it. 2004 January to May Japan's imports from China increased by 9.6%, 5.2%, 25.5% and 12.9% respectively. The three most important products imported by Japan from China are: machinery and equipment, textiles and food. Machinery and equipment, which accounts for the largest share of imports (almost 40 percent), increased by about 20 percent, reaching 41.9 percent in March.
3, the first quarter, China's exports to the European Union 20.04 billion U.S. dollars, an increase of 41.7%; the European Union has become China's second-largest export trading partner, of which China's exports to Germany, the United Kingdom, France, Italy and the Netherlands 5 countries accounted for 76.5% of China's total exports to the European Union, an increase of 38.9%, 42.4%, 67.4%, 23.9% and 40.5% respectively. The unfavorable factors faced by China's exports to Europe China's exports to Europe are faced with unfavorable factors is that the European Commission on December 10, 2001, May 8, 2003 and December 23, three times on China's exports to the implementation of the "Generalized System of Preferences" graduation, the abolition of 16 categories of China's exports to Europe's Generalized System of Preferences treatment. At the same time, the EU is still giving GSP treatment to exports from other countries, China's exports to the EU will be at a disadvantage in the competition with goods from these countries.
4, May 1 this year, the EU's eastward expansion, for Chinese enterprises to provide a broader, unified and stable market. Today, as long as my products into any one of the EU member states, you can enter the other member states market, and Chinese enterprises in the 10 new member states of the business is relatively more, the eastward expansion for my enterprises to enter the old member states of the EU market provides an opportunity; and because the EU operating rules will be realized unification of my enterprises to the EU trade in the formalities will tend to be simplified, so that China's products to enter the EU market provides more convenient conditions. conditions for our products to enter the EU market. At the same time, because the tariffs of industrial manufactured goods in the 10 new accession countries before the eastward expansion are generally higher than the average level of the EU (3.6%), after the eastward expansion of the EU to apply the EU harmonized tariff rate, will make China's export products, including clocks and watches, toys, games, sporting goods and artificial jewelry, etc. from the trade of the new accession countries to obtain the relatively low EU tariff rate, reducing the cost of my products. In addition, after the EU's eastward expansion, with the economic growth of the new member states and the gradual increase in residents' income, their labor costs will increase faster, which is also conducive to the maintenance and enhancement of the competitiveness of my products. Of course, the EU's new 10 member states of the old EU member states of the export commodity structure and China's exports to the EU commodity structure there is a certain degree of similarity, does not rule out the possibility of crowding out some of my products in the European Union (mainly Germany, France and other euro-zone countries) the share of the market.
(2) the development of the international commodity market to China's exports brought new business opportunities
World commodity trade rebound and growth, prices rose sharply, to the development of China's corporate exports brought a rare opportunity.
1, the world's information technology industry market outlook is good. 2003 world semiconductor sales annual increase of 18.3% in 2004 will be more accelerated momentum, the increase is expected to be much higher than the previous year, reaching 29%, sales are expected to be able to basically return to the peak level of the network bubble in 2000. As the market recovers and accelerates growth, semiconductor prices have also risen significantly. The situation is also largely the same for the computer and cell phone markets, which are the two major growth engines of the IT industry. China's exports of high-tech products, mainly factory products, when there are broad prospects for development.
2, textiles and clothing after the arrival of the quota era, will bring a new broad space for China's textile and clothing trade. China's textile and apparel exports over the long term, although there has been growth, but foreign quota restrictions are still affecting the expansion of my exports is a major factor. Such as according to WTO statistics, from 1995 to 2002 7 years China's textile and clothing exports increased by 62.9%, in the world textile and clothing exports accounted for the proportion of 12.2% to 17.5%, that is, an increase of 5.3 percentage points, but by the quota restrictions on textile and clothing, during the same period of time my textile and clothing in the United States imports accounted for the proportion of only 0.9 percentage points of growth. WTO "Textile and Clothing Agreement" on textile and clothing quota provisions will be terminated at the end of 2004. For this reason, many overseas businessmen believe that the space for trade with Chinese enterprises will be greater. According to my spring of this year's Guangzhou Fair Textile Chamber of Commerce statistics, the fair will be there than the previous session of the merchants have increased significantly, many of them are still the first time to the meeting, one of the main reasons is that next year, after the abolition of the quota, a number of foreign buyers are optimistic about China's textile and apparel, and hope that the Canton Fair to visit, the establishment of a new supply channel.
3, in the world non-ferrous metal market demand rebound, prices continue to rise, tin market supply shortages over the years, lead, zinc supply is also in short supply, since 2003, the price of respectively, have soared, is a good time for me to expand exports. World prices of non-ferrous metals in general in 2002 after a slight rebound in 2003 and even the current price has been significantly higher. In this context, the world price of tin in 2003 also has a substantial upward movement. Such as in December 2003, the price of tin for 6057.62 U.S. dollars per ton, compared with the same period last year jumped 43%, since 2004, as of April, compared with the previous year in December and then rose 47.8%. The reason for this situation is mainly due to the continuous growth of tin consumption, the market for years to produce more than enough to consume, the supply is seriously inadequate. According to statistics, in 2001, the world tin consumption than the previous year increased by 0.3% in 2002 for an increase of 3.8% in 2003 increased by 6.2% in 2004 is expected to increase by 4.1%, while the same period of the world's tin production average annual increase of about only 1.3%. In this case, the tin market production is not enough to consume the amount of 500 tons in 2001, 2002 for 2,900 tons in 2003, a steep increase of 24,800 tons in 2004 is expected to increase up to 30,400 tons. The same is true for the world lead and zinc markets. Following the 2001-2002 or 2003, a significant excess supply, in 2004, the world lead and zinc markets are also expected to face 125,000 tons and 100,000 tons, respectively, a large supply shortfall.
(C) China's influence on the world economy continues to strengthen
According to the International Monetary Fund according to the purchasing power parity of the latest published calculations, China's economy has accounted for the world's gross domestic product of 12.6%, ranked after the United States and the European Union. The United States and the European Union accounted for 21.1 percent and 19.9 percent of the world's gross domestic product, respectively. China's rapid economic growth has contributed to the world economy. Developed countries in particular have benefited from imports produced by cheap labor, while at the same time there has been a greater demand for high-tech products and services. Other developing countries will see increased export opportunities to China, including primary and manufactured products.
China's imports grew 34 percent last year. From 1-5 this year China's imports grew 41 percent, significantly higher than the rate of export growth (33.4 percent). In particular, imports from the three major markets of the United States, Europe and Japan increased significantly.
China's economy to implement macro-control, will not only affect China itself, but also the rest of the world. The ADB report shows that China is the world's largest consumer of steel, antimony, zinc, platinum, steel and iron ore; it is the second-largest consumer of aluminum and silver, and the third-largest consumer of nickel, and that China is now the world's second-largest consumer of petroleum (after the U.S.) and accounted for 35% of the growth in global oil needs in 2003. China also produces 50 percent of the world's cameras and 30 percent of air conditioners and televisions. China has become a major trading partner of Southeast Asia ($413 billion in imports from this region last year). China's imports from South Korea, Singapore and Thailand have increased by 50 percent, and imports from the Philippines have doubled. China's imports from ASEAN increased by 41.7% from January to May this year. 80% of Japan's export growth in 2003 originated in China. The ADB estimates that 15% of the world's growth this year will come from China. Stock markets in Asia, Europe and Latin America plummeted and prices of agricultural and mineral products fell sharply after the announcement of China's tightening of lending. The sharp adjustment in China's economy will have an impact on the world economy. Lehman expects the GDP of other emerging Asian economies to fall by three percentage points if China's economy makes a hard landing. A half-percentage-point drop in Japan's GDO growth would be enough to undermine the country's fragile economy