Tuesday, November 26, 2019

Design Concept for a Convention of Medical Doctors

Design Concept for a Convention of Medical Doctors To provide a successful entertainment party for 500 medical doctors, it is very important to consider a number of steps: to choose an appropriate convention center, to evaluate the building and think about proper lighting and decorations, to understand how it is better to locate tables, and to occupy the guests with interesting and funny activities.Advertising We will write a custom essay sample on Design Concept for a Convention of Medical Doctors specifically for you for only $16.05 $11/page Learn More Considering the fact that it is a cocktail party where guest will not be seated, no speakers are invited, and icebreaker reception is required, it is necessary to pay more attention to available event space and design concept. The Grand Prospect Hall, to be more precise the Grand View Ballroom, is the chosen convention center. It is located in Park Slope, Brooklyn (The Grand Prospect Hall, 2007) and is considered to be one of the most amazing historical plac es in New York. Cocktail parties are available for more than 500 people (Cvent Supplier Network, 2010) so that each guest may enjoy the offered comfort and beauty. The size of the hall provides planners with numerous opportunities to develop any kind of entertainment and invite some famous singers or musicians. Such idea meets the requirement set – all guest will mingle and certainly feel relax. There is no need to organize some thematic party and oblige guests to dress themselves accordingly. Now, more attention should be paid to the design concept for the chosen event. Subdued light is a successful decision to be made because guest may relax, be unnoticeable if necessary, and choose any attitude. As all guests do not have an opportunity to seat, it is necessary to have an empty space in the middle of the room: cocktail tables should be located around the whole room, and some space should be provided between the tables so that the guests are free to stand there and enjoy the time spent. In spite of the fact that there are no places for sitting, it is crucially important to consider some space with chairs in case some guests will be in need to sit and relax. It is also necessary to take into consideration the tables for empty glasses and plates. It is an entertainment party, so, it is possible to make use of funny posters or even helium balloons may be appropriate. It is necessary to consider the fact that these balloons should not prevent appropriate illumination of the room. Another considerable part of entertaining program may be a concert of some singer-star. There is no necessity to listen to the whole concert offered by a star, still pleasant background music seems to be appropriate for a party.Advertising Looking for essay on art and design? Let's see if we can help you! Get your first paper with 15% OFF Learn More Icebreaker reception for guests may become paper badges with nicknames for each guest. To succeed in such act ivity, the planner should be aware of every guest and have solid background about all of them. Such badges will be helpful for all guests specially for those who are not familiar with each other in a good way. Drinks should be also properly chosen for an entertaining party especial for such party where guests will not be seated (Shock Stefanelli, 2008). It is wrong to have some strong alcoholic drinks like vodka or whisky because guests should be able to control their behavior and communication with each other. In general, the design concept for the event where 500 medical doctors entertain is based on appropriate illumination, a number of balloons to put the guests in a good mood, background life music, and control over drinks. Reference List Shock, P. J. Stefanelli, J.M. (2008). A Meeting Planner’s Guide to Catered Events. John Willey and Sons, Hoboken, NJ. The Grand Prospect Hall. (2007). Retrieved from https://grandprospect.com/ The Grand Prospect Hall. (2010). Cvent Su pplier Network. Retrieved from https://www.cvent.com/venues/new-york/special-event-venue/the-grand-prospect-hall/venue-5959a37e-38f2-4e21-8505-0ea3d3ead991

Saturday, November 23, 2019

How to Clear Your Mind - Unclog Your Brain - Relax

How to Clear Your Mind - Unclog Your Brain - Relax Sometimes we can get so caught up in the stress and worry of our personal lives that our minds become too jumbled to operate effectively. This is especially dangerous in a test-taking situation. After hours of reading and studying, our brains can lock up in a state of overload. In a stressful situation, it’s often necessary to clear your mind completely to allow your brain to refresh itself and recalibrate all of  its functions. But when you’re tense, clearing your mind isn’t so easy! Try this relaxation technique if you think your brain has seized up from information overload. 1. Set aside at least five minutes for quiet â€Å"clearing† time If youre at school, see if you can put your head down somewhere or find an empty room or quiet space.  If necessary, set a watch (or phone) alarm or ask a friend to tap you on the shoulder at a designated time. 2. Think of a time or place that puts you into a complete state of peace This place will be different for different people. Have you ever sat on the beach watching the waves come in and realized you’ve â€Å"zoned out† for awhile? This is the sort of experience you’re looking for. Other experiences that make us zone out could be: Sitting in the dark and staring at Christmas tree lights- remember how quiet and peaceful that feels?Lying in bed late at night listening to good musicLying on your back on a cool day watching clouds roll by 3. Cover your eyes and go to your â€Å"place† ​ If you are at school preparing for a test before class, you may simply rest your elbows on the desk and put your hands over your eyes. For some people, it may not be a good idea to put your head down. (You might fall asleep!) Use all your senses to make your experience as real as possible. If you are thinking of a Christmas tree, imagine the smell of the tree and the look of the layered shadows on the walls. Don’t let any thoughts creep into your head. As soon as you start to think about a test problem, clear away the thought and concentrate on your peaceful place. 4. Snap out of it! Remember, this is not nap time. The point here is to rejuvenate your brain. After five or ten minutes of clearing time, take a brisk walk or take a drink of water to re-energize your mind and body. Stay relaxed and resist the urge to think about the things that are stressing you out or clogging your brain. Don’t let your brain go back to freeze-out. Now go forward with your test or study session refreshed and ready!

Thursday, November 21, 2019

Select a topic in U.S. History that corresponds to the time period of Essay

Select a topic in U.S. History that corresponds to the time period of 1607-1974 - Essay Example www.nobelprize.org/nobel_prizes/peace/.../king-bio.htmlNobel Prize is the website that I chose to do my research. It clearly and precisely and analyzes the history of Martin Luther since the time he was born and through his activist ministry. It has explained the various civil right movements that he led between early 50s to 1968when he died. The website has given in details the key points, unlike the other websites and so preferred using it in this research. It has discussed the way Martin conducted his activism. I highly recommend this website to the rest for the information it gives is understandable and orderly arranged. The website also has highlighted in explicit details on successes of Martin Luther and the occurrence of his death. From this topic, I have learnt so much about Martin Luther. Martin advocated for nonviolent demonstrations. He educated the southern people on peaceful movements, civil rights and as well politics. He desired to be diplomatic in carrying out his campaigns on call for equality on African American. Martin was so persisting in his work and determined to achieve his targets. In Montgomery Bus Boycott, where an African American was put in prison for failure to give up her seat for an American he called for a lobby group. Boycotting was to carry on for 382 days of harassment and walking to working places. King being the leader was attacked but did not give up. Public transport had a severe economic problem since there was no business for them. Martin was able to get support from other African churches just after he formed the Southern Christian Leadership Conference (SCLC).He was able to go to many places across the country speaking on nonviolent protests. He had a meeting with politicians, religious leaders and other activists to show how devoted he was in work. In August 1963, Martin marched to Washington with his followers and many people came to listen as he gave the speech on â€Å"I have a Dream†. He

Tuesday, November 19, 2019

TOPIC Option I----- Story Truth and Happening Truth ( Tim Essay

TOPIC Option I----- Story Truth and Happening Truth ( Tim O'Brien----The Things They Carried ) - Essay Example Happening truth would therefore, mean nothing if the story truth is not applied to make the story more believable, readable and even enjoyable. O’Brien explains that there was a big difference between the real truth and the story truth. He talks of seeing a man dying on the trail which was near My Khe, but clarifies that he did not kill the man. Later he says that he made up the whole story. O’Brien says that his main aim was to make the reader feel what he personally felt, thus bringing the argument that; sometimes the story truth tends to be more truer compared to the â€Å"happening truth† which indicates the real happenings in the novel. Part C What makes an individual to believe that these happening truth are accurate is due to the repetition done in the chapter that indicates the accuracy of the incidence. They are the emphasis of the shocking reactions by O’Brien. For instance, the manner in which he describes the eyes of the dead soldier just indic ates the accuracy of the happening truth in the story. He says that, the victim’s one eye was shut and the other had a star shaped hole, where the continuous repetition of the incidence indicates the hard moments that O’Brien was going through in his attempts to visualize the man he had just killed. Another element of happening truth being accurate in this story is where Kiowa is trying to make emphasis to O’Brien that the man he had killed was still meant to die, but he does not give any response (O’Brien). Kiowa in the chapter goes on to make continuous comments on the incidence and that O’Brien should not feel bad that he had killed but he does not give back any comment. This whole incidence displays an accurate true happening and thus, brings the feeling of sympathy to a... O’Brien also displays the story truths, through his major focus being directed on the physical characteristics of the man he had killed other than in the real happening focusing on his feelings rather. This is among the phrases that indicate the elements of a â€Å"story true† where he betrays his efforts to maintain some distance to help in killing the pain. He also narrates his story using a protagonist’s perspective other than using narrator aspect. There is nothing like a narrative commentary on the actions of a protagonist and thus we can only deduce what O’Brien is going through (O’Brien). The ideas and feelings brought about by the story in the novel makes an individual to have the negative perception of a war experience, even though one may be fighting to protect his or her country. Many people depict the idea of joining army as a an opportunity to heroically fight for ones country, but after reading this story, and internalizing what O’Brien felt after killing the Viet soldier, a notion of fear to kill just strikes in an individuals head. This story results to a turn around regarding what people perceive wars to be. By reading this story, a student should learn to be accountable of his or her conduct. If one behaves recklessly now, he should note that, the outcomes will haunt him even after he clears school, like the killing of a soldier haunted O’Brien’s twenty years later. In life also, one should understand that, there are some people who would celebrate on your misfortunes, this is witnessed when Azar is happy that the soldier is dead, but another lesson learnt is that, silence is the best weapon as O’Brien made no comment.

Sunday, November 17, 2019

Foreign exchange market Essay Example for Free

Foreign exchange market Essay Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by loweringinterest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values. Monetary policy, to a great extent, is the management of expectations. Monetary policy rests on the relationship between the rates of interest in an economy, that is, the price at which money can be borrowed, and the total supply of money. Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate (to achieve policy goals). The beginning of monetary policy as such comes from the late 19th century, where it was used to maintain the gold standard. General Monetary policy is the process by which the government, central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest to attain a set of objectives oriented towards the growth and stability of the economy. Monetary theory provides insight into how to craft optimal monetary policy. Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply of money. Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate (to achieve policy goals). It is important for policymakers to make credible announcements. If private agents (consumers and firms) believe that policymakers are committed to lowering inflation, they will anticipate future prices to be lower than otherwise (how those expectations are formed is an entirely different matter; compare for instance rational expectations with adaptive expectations). If an employee expects prices to be high in the future, he or she will draw up a wage contract with a high wage to match these prices. Hence, the expectation of lower wages is reflected in wage-setting behavior between employees and employers (lower wages since prices are expected to be lower) and since wages are in fact lower there is no demand pull inflation because employees are receiving a smaller wage and there is no cost push inflation because employers are paying out less in wages. 2. What is a Central Bank? A central bank, reserve bank, or monetary authority is an institution that manages a states currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the amount of money in the nation, and usually also prints the national currency, which usually serves as the nations legal tender. Examples include the European Central Bank (ECB) and the Federal Reserve of the United States. The primary function of a central bank is to manage the nations money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. Central banks usually also have supervisory powers, intended to prevent bank runs and to reduce the risk that commercial banks and other financial institutions engage in reckless or fraudulent behavior. Central banks in most developed nations are institutionally designed to be independent from political interference. THE BANGKO SENTRAL NG PILIPINAS The Bangko Sentral ng Pilipinas (English: Central Bank of the Philippines; Spanish: Banco Central de Filipinas; commonly abbreviated as BSP in both Filipino and English), is the central bank of the Philippines. It was established on July 3, 1993, pursuant to the provision of Republic Act 7653 or the New Central Bank Act of 1993. History In 1900, the First Philippine Commission passed Act No. 52, which placed all banks under the Bureau of the Treasury and authorizing the Insular Treasurer to supervise and examine banks and all banking activity. In 1929, the Department of Finance, through the Bureau of Banking, took over bank supervision. By 1933, a group of Filipinos had conceptualized a central bank for the Philippine Islands. It came up with the rudiments of a bill for the establishment of a central bank after a careful study of the economic provisions of the Hare–Hawes–Cutting Act, which would grant Philippine independence after 12 years, but reserving military and naval bases for the United States and imposing tariffs and quotas on Philippine exports. However, the Hare–Hawes–Cutting Act would be rejected by the Senate of the Philippines at the urging of Manuel L. Quezon. This Senate then advocated a new bill that won President Franklin D. Roosevelts support; this would be the Tydings–McDuffie Act, which would grant Philippine independence on July 4, 1946. During the Commonwealth Period, discussions continued regarding the idea of a Philippine central bank that would promote price stability and economic growth. The countrys monetary system then was administered by the Department of Finance and the National Treasury, and the Philippine peso was on the exchange standard using the United States dollar, which was backed by 100 percent gold reserve, as the standard currency. As required by the Tydings–McDuffie Act, the National Assembly of the Philippines in 1939 passed a law establishing a central bank. As it was a monetary law, it required the approval of the President of the United States; Franklin D. Roosevelt did not give his. A second law was passed in 1944 under the Japanese-controlledSecond Republic, but the arrival of American liberation forces in 1945 aborted its implementation. Shortly after President Manuel Roxas assumed office in 1946, he instructed then-Finance Secretary Miguel Cuaderno, Sr. to draw up a charter for a central bank. The establishment of a monetary authority became imperative a year later as a result of the findings of the Joint Philippine-American Finance Commission chaired by Cuaderno. The Commission, which studied Philippine financial, monetary, and fiscal problems in 1947, recommended a shift from the dollar exchange standard to a managed currency system. A central bank was necessary to implement the proposed shift to the new system. Roxas then created the Central Bank Council to prepare the charter of a proposed monetary authority. It was submitted to Congress in February 1948. By June of the same year, the newly proclaimed President Elpidio Quirino, who succeeded President Roxas, affixed his signature on Republic Act (RA) No. 265, the Central Bank Act of 1948.On January 3, 1949, the Central Bank of the Philippines was formally inaugurated with Miguel Cuaderno, Sr. as the first governor. The main duties and responsibilities of the Central Bank were to promote economic development and maintain internal and external monetary stability. 3. What are the Types of Monetary Policy? In practice, to implement any type of monetary policy the main tool used is modifying the amount of base money in circulation. The monetary authority does this by buying or selling financial assets (usually government obligations). These open market operations change either the amount of money or its liquidity (if less liquid forms of money are bought or sold). The multiplier effect of fractional reserve banking amplifies the effects of these actions. Constant market transactions by the monetary authority modify the supply of currency and this impacts other market variables such as short term interest rates and the exchange rate. The distinction between the various types of monetary policy lies primarily with the set of instruments and target variables that are used by the monetary authority to achieve their goals. Monetary Policy: Target Market Variable: Long Term Objective: Inflation Targeting Interest rate on overnight debt A given rate of change in the CPI Price Level Targeting Interest rate on overnight debt A specific CPI number Monetary Aggregates The growth in money supply A given rate of change in the CPI Fixed Exchange Rate The spot price of the currency The spot price of the currency Gold Standard The spot price of gold Low inflation as measured by the gold price Mixed Policy Usually interest rates Usually unemployment + CPI change The different types of policy are also called monetary regimes, in parallel to exchange rate regimes. A fixed exchange rate is also an exchange rate regime; The Gold standard results in a relatively fixed regime towards the currency of other countries on the gold standard and a floating regime towards those that are not. Targeting inflation, the price level or other monetary aggregates implies floating exchange rate unless the management of the relevant foreign currencies is tracking exactly the same variables. In economics, an expansionary fiscal policy includes higher spending and tax cuts, that encourage economic growth. In turn, an expansionary monetary policy is one that seeks to increase the size of the money supply. Conversely, contractionary monetary policy seeks to reduce the size of the money supply. In most nations, monetary policy is controlled by either a central bank or a finance ministry. In most nations, monetary policy is controlled by either a central bank or a finance ministry. Neoclassical and Keynesian economics significantly differ on the effects and effectiveness of monetary policy on influencing the real economy; there is no clear consensus on how monetary policy affects real economic variables (aggregate output or income, employment). Both economic schools accept that monetary policy affects monetary variables (price levels, interest rates). Inflation targeting Under this policy approach the target is to keep inflation, under a particular definition such as Consumer Price Index, within a desired range. The inflation target is achieved through periodic adjustments to the Central Bank interest rate target. The interest rate used is generally the interbank rate at which banks lend to each other overnight for cash flow purposes. Depending on the country this particular interest rate might be called the cash rate or something similar. The interest rate target is maintained for a specific duration using open market operations. Typically the duration that the interest rate target is kept constant will vary between months and years. This interest rate target is usually reviewed on a monthly or quarterly basis by a policy committee. Changes to the interest rate target are made in response to various market indicators in an attempt to forecast economic trends and in so doing keep the market on track towards achieving the defined inflation target. For example, one simple method of inflation targeting called the Taylor rule adjusts the interest rate in response to changes in the inflation rate and the output gap. The rule was proposed  by John B. Taylor of Stanford University. The inflation targeting approach to monetary policy approach was pioneered in New Zealand. It has been used inAustralia, Brazil, Canada, Chile, Colombia, the Czech Republic, Hungary, New Zealand, Norway, Iceland, India,Philippines, Poland, Sweden, South Africa, Turkey, and the United Kingdom. Price level targeting Price level targeting is a monetary policy that is similar to inflation targeting except that CPI growth in one year over or under the long term price level target is offset in subsequent years such that a targeted price-level is reached over time, e.g. five years, giving more certainty about future price increases to consumers. Under inflation targeting what happened in the immediate past years is not taken into account or adjusted for in the current and future years. Uncertainty in price levels can create uncertainty around price and wage setting activity for firms and workers, and undermines any information that can be gained from relative prices, as it is more difficult for firms to determine if a change in the price of a good or service is because of inflation or other factors, such as an increase in the efficiency of factors of production, if inflation is high and volatile. An increase in inflation also leads to a decrease in the demand for money, as it reduces the incentive to hold money and increases transaction and shoe leather costs. Monetary aggregates In the 1980s, several countries used an approach based on a constant growth in the money supply. This approach was refined to include different classes of money and credit (M0, M1 etc.). In the USA this approach to monetary policy was discontinued with the selection of Alan Greenspan as Fed Chairman. This approach is also sometimes called monetarism. While most monetary policy focuses on a price signal of one form or another, this approach is focused on monetary quantities. As these quantities could have a role on the economy and business cycles depending on the households risk aversion level, money is sometimes explicitly added in the central banks reaction function. Fixed exchange rate This policy is based on maintaining a fixed exchange rate with a foreign currency. There are varying degrees of fixed exchange rates, which can be ranked in relation to how rigid the fixed exchange rate is with the anchor nation. Under a system of fiat fixed rates, the local government or monetary authority declares a fixed exchange rate but does not actively buy or sell currency to maintain the rate. Instead, the rate is enforced by non-convertibility measures (e.g. capital controls, import/export licenses, etc.). In this case there is a black market exchange rate where the currency trades at its market/unofficial rate. Under a system of fixed-convertibility, currency is bought and sold by the central bank or monetary authority on a daily basis to achieve the target exchange rate. This target rate may be a fixed level or a fixed band within which the exchange rate may fluctuate until the monetary authority intervenes to buy or sell as necessary to maintain the exchange rate within the band. (In this case, the fixed exchange rate with a fixed level can be seen as a special case of the fixed exchange rate with bands where the bands are set to zero.) Under a system of fixed exchange rates maintained by a currency board every unit of local currency must be backed by a unit of foreign currency (correcting for the exchange rate). This ensures that the local monetary base does not inflate without being backed by hard currency and eliminates any worries about a run on the local currency by those wishing to convert the local currency to the hard (anchor) currency. Under dollarization, foreign currency (usually the US dollar, hence the term dollarization) is used freely as the medium of exchange either exclusively or in parallel with local currency. This outcome can come about because the local population has lost all faith in the local currency, or it may also be a policy of the government (usually to rein in inflation and import credible monetary policy). These policies often abdicate monetary policy to the foreign monetary authority or government as monetary policy in the pegging nation must align with monetary policy in the anchor nation to maintain the exchange rate. The degree to which local monetary policy becomes dependent on the anchor nation depends on factors such as capital mobility, openness, credit channels and other economic factors. Gold standard The gold standard is a system under which the price of the national currency is measured in units of gold bars and is kept constant by the governments promise to buy or sell gold at a fixed price in terms of the base currency. The gold standard might be regarded as a special case of fixed exchange rate policy, or as a special type of commodity price level targeting. Today this type of monetary policy is no longer used by any country, although the gold standard was widely used across the world between the mid-19th century through 1971. Its major advantages were simplicity and transparency. The gold standard was abandoned during the Great Depression, as countries sought to reinvigorate their economies by increasing their money supply. The Bretton Woods system, which was a modified gold standard, replaced it in the aftermath of World War II. However, this system too broke down during the Nixon shock of 1971. The gold standard induces deflation, as the economy usually grows faster than the supply of gold. When an economy grows faster than its money supply, the same amount of money is used to execute a larger number of transactions. The only way to make this possible is to lower the nominal cost of each transaction, which means that prices of goods and services fall, and each unit of money increases in value. Absent precautionary measures, deflation would tend to increase the ratio of the real value of nominal debts to physical assets over time. For example, during deflation, nominal debt and the monthly nominal cost of a fixed-rate home mortgage stays the same, even while the dollar value of the house falls, and the value of the dollars required to pay the mortgage goes up. Economists generally consider such deflation to be a major disadvantage of the gold standard. Unsustainable (i.e. excessive) deflation can cause problems during recessions and crisis lengthening the amount of time an economy spends in recession. William Jennings Bryan rose to national prominence when he built his historic (though unsuccessful) 1896 presidential campaign around the argument that deflation caused by the gold standard made it harder for everyday citizens to start new businesses, expand their farms, or build new homes. 4. What are the Monetary Policy tools? Monetary policy uses three main tactical approaches to maintain monetary stability: The first tactic manages the money supply. This mainly involves buying government bonds (expanding the money supply) or selling them (contracting the money supply). In the Federal Reserve System, these are known as open market operations, because the central bank buys and sells government bonds in public markets. Most of the government bonds bought and sold through open market operations are short-term government bondsbought and sold from Federal Reserve System member banks and from large financial institutions. When the central bank disburses or collects payment for these bonds, it alters the amount of money in the economy while simultaneously affecting the price (and thereby the yield) of short-term government bonds. The change in the amount of money in the economy in turn affects interbank interest rates. The second tactic manages money demand. Demand for money, like demand for most things, is sensitive to price. For money, the price is the interest rates charged to borrowers. Setting banking-system lending or interest rates (such as the US overnight bank lending rate, the federal funds discount Rate, and the London Interbank Offer Rate, or Libor) in order to manage money demand is a major tool used by central banks. Ordinarily, a central bank conducts monetary policy by raising or lowering its interest rate target for the interbank interest rate. If the nominal interest rate is at or very near zero, the central bank cannot lower it further. Such a situation, called a liquidity trap, can occur, for example, during deflation or when inflation is very low. The third tactic involves managing risk within the banking system. Banking systems use fractional reserve banking to encourage the use of money for investment and expanding economic activity. Banks must keep banking reserves on hand to handle actual cash needs, but they can lend an amount equal to several times their actual reserves. The money lent out by banks increases the money supply, and too much money (whether lent or printed) will lead to inflation. Central banks manage systemic risks by maintaining a balance between expansionary economic activity through bank lending and control of inflation through reserve requirements. 5. What is Fiscal Policy? Fiscal policy is a type of economical intervention where the government injects its policies into an economy in order to either expand the economy’s growth or to contract it. By changing the levels of spending and taxation, a government can directly or indirectly affect the aggregate demand, which is the total amount of goods and services in an economy. One thing to remember concerning fiscal policy is that a recession is generally defined as a time period of at least two quarters of consecutive reduction in growth. It may take time to even recognize whether or not there is a recession. With fiscal policy, there will be certain levels of lag time in which conditions will deteriorate before being recognized. At the same time, fiscal policy takes time to implement due to legislative and administrative processes, and those same policies will take time to show results after implementation. Consumers can also react to these policies positively or negatively. Most consumers would have a positive reaction per say to a policy that lowers taxes, while some will have an issue with a government spending more which will increase the burden of debt on nations citizens. Nevertheless, fiscal policy is a type of intervention that can help to control the direction of an economy. Deciding if and when it should be used will certainly continue to be debated. In economics and political science, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors. These changes can affect the following macroeconomic variables in an economy: Aggregate demand and the level of economic activity; The distribution of income; The pattern of resource allocation within the sector and relative to the private sector. Fiscal policy refers to the use of the government budget to influence economic activity. 6. What are the Types of Fiscal Policy? Expansionary Fiscal Policy When an economy is in a recession, expansionary fiscal policy is in order. Typically this type of fiscal policy results in increased government spending and/or lower taxes. A recession results in a recessionary gap – meaning that aggregate demand (ie, GDP) is at a level lower than it would be in a full employment situation. In order to close this gap, a government will typically increase their spending which will directly increase the aggregate demand curve (since government spending creates demand for goods and services). At the same time, the government may choose to cut taxes, which will indirectly affect the aggregate demand curve by allowing for consumers to have more money at their disposal to consume and invest. The actions of this expansionary fiscal policy would result in a shift of the aggregate demand curve to the right, which would result closing the recessionary gap and helping an economy grow. Contractionary Fiscal Policy Contractionary fiscal policy is essentially the opposite of expansionary fiscal policy. When an economy is in a state where growth is at a rate that is getting out of control (causing inflation and asset bubbles), contractionary fiscal policy can be used to rein it in to a more sustainable level. If an economy is growing too fast or for example, if unemployment is too low, an inflationary gap will form. In order to eliminate this inflationary gap a government may reduce government spending and increase taxes. A decrease in spending by the government will directly decrease aggregate demand curve by reducing government demand for goods and services. Increases in tax levels will also slow growth, as consumers will have less money to consume and invest, thereby indirectly reducing the aggregate demand curve. Considerations Economic fluctuations independent of policy actions by government often affect the level of tax revenues, forcing elected officials to alter fiscal policy. For example, economic recessions reduce output and employment, resulting in reduced revenue for government coffers. This often forces policy makers to consider contractionary measures, such as increasing revenues by raising taxes or cutting government spending. 7. What are the Components/Instruments of Fiscal Policy? Taxation Taxation is one of the two primary instruments of fiscal policy. When the government increases or decreases taxes, it increases or decreases the amount of money consumers have to spend which can have a significant impact on the direction of the overall economy. A decrease in taxation tends to put more money into the hands of consumers, which can lead to increased spending. Increased spending tends to lead to higher revenues for businesses, which can allow them to expand and hire more workers. Cutting taxes is a common fiscal policy measure to encourage economic growth. Government Spending Government spending is the other main instrument of fiscal policy. The expenditures of the government can promote economic activity and create jobs. For example, if the government funds a project to build a high-speed train across the country, the funds that go into the project could go toward hiring workers which could reduce unemployment and inject money into the economy. Higher levels of government spending tend to promote employment and economic growth. Considerations The government uses fiscal policy to promote economic growth, low unemployment and to stabilize the economy. During period of low economic growth, the government tends to cut taxes and may increase spending in an attempt to spark growth. During periods of high economic growth, the government may increase taxes and cut spending to ensure that the economy doesnt grow too quickly which can result in undesirable effects like high inflation. 8. What are the Stances of Fiscal Policy? The three main stances of fiscal policy are: Neutral fiscal policy is usually undertaken when an economy is in equilibrium. Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity. Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions. Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt. However, these definitions can be misleading because, even with no changes in spending or tax laws at all, cyclic fluctuations of the economy cause cyclic fluctuations of tax revenues and of some types of government spending, altering the deficit situation; these are not considered to be policy changes. Therefore, for purposes of the above definitions, government spending and tax revenue are normally replaced by cyclically adjusted government spending and cyclically adjusted tax revenue. Thus, for example, a government budget that is balanced over the course of the business cycle is considered to represent a neutral fiscal policy stance. 1. Methods of funding Governments spend money on a wide variety of things, from the military and police to services like education and healthcare, as well as transfer payments such as welfare benefits. This expenditure can be funded in a number of different ways: Taxation Seignior age, the benefit from printing money Borrowing money from the population or from abroad Consumption of fiscal reserves Sale of fixed assets (e.g., land) 2. Borrowing A fiscal deficit is often funded by issuing bonds, like treasury bills or consols and gilt-edged securities. These pay interest, either for a fixed period or indefinitely. If the interest and capital requirements are too large, a nation may default on its debts, usually to foreign creditors. Public debt or borrowing refers to the government borrowing from the public. 3. Consuming prior surpluses A fiscal surplus is often saved for future use, and may be invested in either local currency or any financial instrument that may be traded later once resources are needed; notice, additional debt is not needed. For this to happen, the marginal propensity to save needs to be strictly positive. Economic effects of fiscal policy Governments use fiscal policy to influence the level of aggregate demand in the economy, in an effort to achieve economic objectives of price stability, full employment, and economic growth. Keynesian economics suggests that increasing government spending and decreasing tax rates are the best ways to stimulate aggregate demand, and decreasing spending increasing taxes after the economic boom begins. Keynesians argue this method be used in times of recession or low economic activity as an essential tool for building the framework for strong economic growth and working towards full employment. In theory, the resulting deficits would be paid for by an expanded economy during the boom that would follow; this was the reasoning behind the New Deal. Governments can use a budget surplus to do two things: to slow the pace of strong economic growth, and to stabilize prices when inflation is too high. Keynesian theory posits that removing spending from the economy will reduce levels of aggregate demand and contract the economy, thus stabilizing prices. But economists still debate the effectiveness of fiscal stimulus. The argument mostly centers on crowding out: whether government borrowing leads to higher interest rates that may offset the simulative impact of spending. When the government runs a budget deficit, funds will need to come from public borrowing (the issue of government bonds), overseas borrowing, or monetizing the debt. When governments fund a deficit with the issuing of government bonds, interest rates can increase across the market, because government borrowing creates higher demand for credit in the financial markets. This causes a lower aggregate demand for goods and services, contrary to the objective of a fiscal stimulus. Neoclassical economists generally emphasize crowding out while Keynesians argue that fiscal policy can still be effective especially in a liquidity trap where, they argue, crowding out is minimal. 9. What are the Functions of Fiscal Policy? Allocation The first major function of fiscal policy is to determine exactly how funds will be allocated. This is closely related to the issues of taxation and spending, because the allocation of funds depends upon the collection of taxes and the government using that revenue for specific purposes. The national budget determines how funds are allocated. This means that a specific amount of funds is set aside for purposes specifically laid out by the government. This has a direct economic impact on the country. Distribution Whereas allocation determines how much will be set aside and for what purpose, the distribution function of fiscal policy is to determine more specifically how those funds will be distributed throughout each segment of the economy. For instance, the government might allocate $1 billion toward social welfare programs, but $100 million could be distributed to food stamp programs, while another $250 million is distributed among low-cost housing authority agencies. Distribution provides the specific explanation of what allocation was intended for in the first place. Stabilization Stabilization is another important function of fiscal policy in that the purpose of budgeting is to provide stable economic growth. Without some restraints on spending, the economic growth of the nation could become unstable, resulting in periods of unrestrained growth and contraction. While many might frown upon governmental restraint of growth, the stock market crash of 1929 made it clear that unfettered growth could have serious consequences. The cyclical nature of the market means that unrestrained growth cannot continue for an indefinite period. When growth periods end, they are followed by contraction in the form of recessions or prolonged recessions known as depressions. Fiscal policy is designed to anticipate and mitigate the effects of such economic lulls. Development The fourth major function of fiscal policy is that of development. Development seems to indicate economic growth, and that is, in fact, its overall purpose. However, fiscal policy is far more complicated than determining how much the government will tax citizens one year and then determining how that money will be spent. True economic growth occurs when various projects are financed and carried out using borrowed funds. This stems from the the belief that the private sector cannot grow the economy by itself. Instead, some government input and influence are needed. Borrowing funds for this economic growth is one way in which the government brings about development. This economic model developed by John Maynard Keynes has been adopted in various forms since the World War II era. 10. What is the Fiscal Policy in the Philippines? Fiscal policy refers to the measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. In the Philippines, this is characterized by continuous and increasing levels of debt and budget deficits, though there have been improvements in the last few years. The Philippine government’s main sources of revenue are taxes, with some non-tax revenue also being collected. To finance fiscal deficit and debt, the Philippines rely on both domestic and external sources. Fiscal policy during the Marcos administration was primarily focused on indirect tax collection and on government spending on economic services and infrastructure development. The administration inherited a large fiscal deficit from the previous administration, but managed to reduce fiscal imbalance and improve tax collection through the introduction of the 1986 Tax Reform Program and the value added tax. The Ramos experienced budget surpluses due to substantial gains from the massive sale of government assets and strong foreign investment in its early years. However, the implementation of the 1997 Comprehensive Tax Reform Program and the onset of the Asian financial crisis resulted to a deteriorating fiscal position in the succeeding years and administrations. The Estrada administration faced a large fiscal deficit due to the decrease in tax effort and the repayment of the Ramos administration’s debt to contractors and suppliers. During the Arroyo administration, the Expanded Value Added Tax Law was enacted, national debt-to-GDP ratio peaked, and under spending on public infrastructure and other capital expenditures was observed. History of Philippine Fiscal Policy Marcos Administration (1981-1985) The tax system under the Marcos administration was generally regressive as it was heavily dependent on indirect. Indirect taxes and international trade taxes accounted for about 35% of total tax revenue, while direct taxes only accounted for 25%. Government expenditure for economic services peaked during this period, focusing mainly on infrastructure development, with about 33% of the budget spent on capital outlays. In response to the higher global interest rates and to the depreciation of the peso, the government became increasingly reliant on domestic financing to finance fiscal deficit. The government also started liberalizing tariff policy during this period by enacting the initial Tariff Reform Program, which narrowed the tariff structure from a range of 100%-0% to 50%-10%, and the Import Liberalization Program, which aimed at reducing or eliminating tariffs and realigning indirect taxes. Aquino Administration (1986-1992) Faced with problems inherited from the previous administration, the most important of which being the large fiscal deficit heightened by the low tax effort due to a weak tax system, Aquino enacted the 1986 Tax Reform Program (TRP). The aim of the TRP was to â€Å"simplify the tax system, make revenues more responsive to economic activity, promote horizontal equity and promote growth by correcting existing taxes that impaired business incentives†. One of the major reforms enacted under the program was the introduction of the Value Added Tax (VAT), which was set at 10%. The 1986 tax reform program resulted in reduced fiscal imbalance and higher tax effort in the succeeding years, peaking in 1997, before the enactment of the 1997 Comprehensive Tax Reform Program (CTRP). The share of non-tax revenues during this period soared due to the sale of sequestered assets of President Marcos and his cronies (totalling to about â‚ ±20 billion), the initial efforts to deregulate the oil i ndustry and thrust towards the privatization of state enterprises. Public debt servicing and interest payments as a percent of the budget peaked during this period as government focused on making up for the debt incurred by the Marcos administration. Another important reform enacted during the Aquino administration was the passage of the 1991 Local Government Code which enabled fiscal decentralization. This increased the taxing and spending powers to local governments in effect increasing local government resources. Ramos Administration (1993-1998) The Ramos administration had budget surpluses for four of its six years in power. The government benefited from the massive sale of government assets (totalling to about â‚ ±70 billion, the biggest among the administrations) and continued to benefit from the 1986 TRP. The administration invested heavily on the power sector as the country was beset by power outages. The government utilized its emergency powers to fast-track the construction of power projects and established contracts with independent power plants. This period also experienced a real estate boom and strong foreign direct investment to the country during the early years of the administration, in effect overvaluing the peso. However, with the onset of the Asian financial crisis, the peso depreciated by almost 40%. The Ramos administration relied heavily on external borrowing to finance its fiscal deficit but quickly switched to domestic dependence on the onset of the Asian financial crisis. The administration has been accused of resorting to â€Å"budget trickery† during the crisis: balancing assets through the sales of assets, building up accounts payable and delaying payment of government premium to social security holders. In 1997, the Comprehensive Tax Reform Program (CTRP) was enacted. Republic Act (RA) 8184 and RA 8240, which were implemented under the program, were estimated to yield additional taxes of around â‚ ±7.4 billion; however, a decline in tax effort during the succeeding periods was observed after the CTRP was implemented. This was attributed to the unfavorable economic climate created by the Asian fiscal crisis and the poor implementation of the provisions of the reform. A sharp decrease in international trade tax contribution to GDP was also observed as a consequence of the trade liberalization and globalization efforts in the 1990s, more prominently, the establishment of the ASEAN Free Trade Agreement (AFTA) and membership to the World Trade Organization (WTO) and t he Asia-Pacific Economic Cooperation (APEC). The Ramos administration also provided additional incentives to export-oriented firms, the most prominent among these being RA 7227 which was instrumental to the success of the Subic Bay Freeport Zone. Estrada Administration (1999-2000) President Estrada, who assumed office at the height of the Asian financial crisis, faced a large fiscal deficit, which was mainly attributed to the sharp deterioration in the tax effort (as a result of the 1997 CTRP: increased tax incentives, narrowing of VAT base and lowering of tariff walls) and higher interest payments given the sharp depreciation of the peso during the crisis. The administration also had to pay P60 billion worth of accounts payables left unpaid by the Ramos administration to contractors and suppliers. Public spending focused on social services, with spending on basic education reaching its peak. To finance the fiscal deficit, Estrada created a balance between domestic and foreign borrowing. Arroyo Administration (2002-2009) The Arroyo administration’s poor fiscal position was attributed to weakening tax effort (still resulting from the 1997 CTRP) and rising debt servicing costs (due to peso depreciation). Large fiscal deficits and heavy losses for monitored government corporations were observed during this period. National debt-to-GDP ratio reached an all-time high during the Arroyo administration, averaging at 69.2%. Investment in public infrastructure (at only 1.9% of GDP), expenditure for economic services, health spending and education spending all hit an historic-low during the Arroyo administration. The government responded to its poor fiscal position by under-spending in public infrastructure and social overhead capital (education and health care), thus sacrificing the economy’s long-term growth. In 2005, RA 9337 was enacted, the most significant amendments of which were the removal of electricity and petroleum VAT exemptions and the increase in the VAT rate from 10% to 12%.

Thursday, November 14, 2019

Comparing Robert Frost and Emily Dickinson Essays -- Comparison Poetry

Comparing Robert Frost and Emily Dickinson as Poets Often, the poets Robert Frost and Emily Dickinson try to convey the themes of the meaning of nature, or that of death and loneliness.   Although they were born more than fifty years apart their poetry is similar in many ways.   Both poets talk about the power of nature, death and loneliness.   However, Dickinson and Frost are not similar in all poetic aspects.   In fact, they differ greatly in tone. Emily Dickinson and Robert Frost both talk about the power of nature in their poetry.   Dickinson uses this theme in her poem " `Nature' is what we see -."   The power of nature is strongly portrayed in this poem by Dickinson's articulation of what the speaker see's in nature.   " `Nature' is what we see -... / Nature is what we hear -... / Nature is what we know -" (277 lines 1,5,9).   Nature is everything to a person, it appeals to all senses.   Dickinson also says in this poem, "So impotent Our Wisdom is / To her Simplicity" (277).   The speaker is saying that nature has such great power that one can't even comprehend her simplest ways. In comparison ... ...89.   p466. ----- "Birches."   American Literature. New York:   Scribner Laidlaw.   1989.   p472,473. ----- "Fire and Ice"   American Literature. New York: Scribner Laidlaw.   1989.   p466. Freeman, Margaret. "Metaphor Making Meaning: Dickinson's Conceptual Universe." Journal of Pragmatics 24 (1995): 643-666. Nesteruk, Peter. "The Many Deaths of Emily Dickinson." Emily Dickinson journal 6.1 (1997): 25-44. White, Fred D. "`Sweet Skepticism of the Heart': Science in the Poetry of Emily Dickinson." College Literature 19.1 (Feb 1992): 121-128.

Tuesday, November 12, 2019

Foreign Trade of China

Foreign Trade of China K. C. Fung University of California, Santa Cruz Hitomi Iizaka University of California, Santa Cruz Sarah Tong University of Hong Kong June 2002 Paper prepared for an international conference on â€Å"China’s Economy in the 21st Century†, to be held on June 24-25, 2002, Hong Kong. We would like to thank Alan Siu and Richard Wong for their encouragement. 1. Introduction On December 11, 2001, China officially joined the World Trade Organization (WTO) and became its 143rd member. China’s presence in the world economy will continue to grow and deepen. The foreign trade sector plays an important and ultifaceted role in China’s economic development. At the same time, China’s expanded role in the world economy is beneficial to all its trading partners. Regions that trade with China benefit from cheaper and more varieties of imported consumer goods, raw materials and intermediate products. China is also a large and growing export marke t. While the entry of any major trading nation in the global trading system can create a process of adjustment, the outcome is fundamentally a win-win situation. In this paper we would like to provide a survey of the various institutions, laws and characteristics of China’s trade.Among some of the findings, we can highlight the following: †¢ †¢ †¢ In 2001, total trade to gross domestic product (GDP) ratio in China is 44% In 2001, 47% of Chinese trade is processed trade1 In 2001, 51% of Chinese trade is conducted by foreign firms in China2 1 We define processed trade to include both trade due to processing and assembly and trade due to processing with imported materials. Processing and assembly refers to the type of inward processing in which foreign suppliers provide raw materials, parts or components under a contractual arrangement for the subsequent re-exportation of the processed products.Both the imported inputs and the finished outputs remain property of t he foreign supplier. Processing with imported materials refers to the type of inward processing other than â€Å"processing and assembly†. For details, see China’s Customs Statistics Monthly, December, 2001. †¢ †¢ In 2001, 36% of Chinese exports originate from Guangdong province In 2001, 39% of China’s exports go through Hong Kong to be re-exported elsewhere3 The organization of this paper is as follows: in the next section, we provide a general overview of the past institutions and rules governing trade in China.We will also examine the evolution of China’s general trade pattern over time. In section 3, we will study China’s processed trade and trade conducted by foreign firms. In section 4, we study China's trade by province and by regions. In section 5, we focus on China's trade with the world major regions, including Asia, Europe, North America, Latin America and Africa. In section 6, we will examine China's trade with various major t rading partners. In section 7, we discuss China's new trade regime with its entry to the World Trade Organization (WTO).In section 8, we analyze in greater details the trade relationships between China and the United States, China and Japan, China and the European Union, and between China and the Association of Southeast Asian Nations (ASEAN). In section 9, we conclude. 2. Evolution of China’s Trade Regime Since the economic reforms and open door policy started in 1978, there has been a strikingly sharp rise in China’s exports and imports. As is shown in Table 1, between 1978 and 2001, the total value of China’s trade grew at an average annual rate of 15. 5% and export and imports grew at 16. % and 15. 6% per annum, respectively. 2 Foreign firms include Sino-foreign contractual joint venture, Sino-foreign equity joint venture and foreign-owned enterprises. A substantial portion of trade conducted by foreign firms is processed trade. 3 This is obtained by dividin g the value of Hong Kong re-exports that originate from China by the total Chinese exports to the world. In the pre-reform era, China was an insignificant participant in international trade. China’s foreign trade system was a complete state monopoly controlled by the Ministry of Foreign Trade (MOFT).Trade was conducted by product-specific national foreign trade corporations (FTCs) operating under a near total mandatory trade plan. In 1977, China’s total trade volume was $14. 8 billion, which accounted for only 0. 6% of world trade. A series of measure was introduced to promote exports since 1979. They are meant to decentralize foreign trade administration, to reduce the scope of mandatory planning, and to introduce the market mechanism. Compared to the export system, the import system remained relatively unreformed in the 1980s.In addition to import licensing and high tariffs on protected products, almost all import users were subject to a series of administrative meas ure and complicated approval procedure. By the early 1990s, the significance of China’s role in the international economy was transformed. In 1992, its trade volume accounted for 2. 2% of world trade. China’s trade regime has become more transparent with its desire to join the WTO. The control over imports was more relaxed with a reduction on a large number of tariff rates.In 1994, the foreign exchange regime was reformed by abolishing the dual exchange rate system, which was introduced in 1986 with the establishment of the foreign exchange adjustment centers (FEACs), or swap centers. The new regime allowed domestic firms to buy and sell foreign currencies at the official exchange rate. In 1996, the new foreign exchange regime became applicable to foreign enterprises as well. During the years 1997-1998, the adverse effects of the Asia financial crisis became more apparent, and China’s foreign trade was met with unprecedented difficulties. China’s total tr ade went down by 0. 4% and its imports decreased by 1. %, although its exports maintain a small growth rate of 0. 5%. But China’s trade growth accelerated since 1999 with the recovery in the Asian economies. From 1999 to 2000, total trade grew at an annualized rate of 31. 2%. The export value reached $249. 2 billion, up 27. 8% and the import value reached $225. 1 billion, up 35. 8%. In 2001, there is a modest increase in trading activities, with total trade rising by 7. 8%. Equally remarkable are the changes in the commodity composition of China’s exports and imports. Table 2a shows China’s annual export volumes of primary goods and manufactured goods over time.In 1980, primary goods accounted for 50. 3% of China’s exports and manufactured goods accounted for 49. 7%. Although the share of primary good declines slightly during the first half of 1980’s, it remains at 50. 6% in 1985. Since then, exports of manufactured goods have grown at a much faste r rate than exports of primary goods. As a result, the share of manufactured goods increased to 90. 1%, and that of primary good decreased to 9. 9% by 2001. Also shown in those tables are five subgroups for manufactured goods and primary goods. China’s export was highly dependent on its exports of coal, petroleum, and petroleum products until mid-80s.The large export volume of petroleum was also supported by a sharp rise in oil prices during the period. In 1985, the share of mineral fuels is 26. 1%. In 1986, the sudden decline in the share of primary goods in total exports occurs, which is largely associated with the decline in the export volume of mineral fuels. The price reforms coupled with the declined world petroleum price are attributable to the decline. Domestic agriculture production expanded during the 1980’s in response to the higher prices through the price reforms and more opportunities given to the producers to market their products.Although the share of f ood and live animals in total exports has declined over time, China has become a net exporter of such products since 1984. Turning to the manufactured goods, the large increase in the share of the manufactured goods in the total exports since mid-80s is largely accounted for by the increase in the export in the textile category and the miscellaneous products category. These two groups include labor-intensive products such as textiles, apparel, footwear, and toys and sporting goods. During the 1990s, the category that exhibited the most significant surge in exports is machinery and transport equipment.Its share expanded from 9. 0% in 1990 to 35. 7 % in 2001. The change in the commodity composition in China’s imports can be seen in Table 2b. The share of primary goods in total exports fell from 34. 8% in 1980 to 18. 8% in 2001. The decline in the share reflects large decrease in imports of food and live animals. Its share reached the highest at 21. 8% in 1982 has declined over the past 20 years to 2. 0% in 2001. The increased production of agricultural production due to domestic economic reforms enable China to reduce the amount of its agricultural imports.The share of mineral fuels in imports on the other hand, has been steadily increasing during the period. The rapid economic growth that China has experienced has led to a shortage of those products domestically. China has been a net importer of mineral fuels for the past six consecutive years. The share of manufactured products in total imports rose from 65. 2% in 1980 to 81. 2% in 2001. This is largely attributed to sharply rising imports of machinery and transportation equipment. There are two major factors that led to the increase of importing machinery and transportation equipment.First, the imported machinery and transportation equipment embodied a higher level of technology than those produced domestically. Second, since China initiated the open-door policy, throughout the 1980s and the 1990s, the government promoted to open the economy to foreign investors by adopting a series of reforms and new regulations. Those include establishing Special Economic Zones, Open Coastal Cities, opening up of new sectors, various preferential policies for foreign multinationals such as tax concession, import tariff exemption, and so on.These efforts resulted in creating a more favorable investment environment for foreign multinationals, which led to a considerable rise in foreign direct investment. Among other activities, these foreign firms engage in processing trade. China has become an important link in the global supply chain for multinationals. In addition, China has also a large and growing market. The increased share of imports of machinery and electronics products reflects the increased use of global outsourcing as well as the growth of China’s domestic market. 3.China’s Processing Trade and Trade by Foreign Invested Firms China established the legal framework for proc essing and assembly arrangements in 1979. Since then, China has built up considerable strengths in assembling and processing of industrial parts and components. It covers a wide range of industries such as electric machinery, automobile, aerospace, and shipbuilding. Table 3a and Table 3b demonstrate the amount of processing exports and imports and the importance of stateowned enterprises (SOEs) and foreign-invested enterprises (FIEs) in such forms of trade for 1995-2001.Throughout the period from 1995 to 2001, the shares of these two types of processing exports exceed more than half of China’s total exports. In 2001, processing exports account for 55. 4% of the total exports. As is seen in Table 3a, process & assembling was dominated by SOEs in 1995. However, the trend has been changing. The share of SOEs in process & assembling has been steadily declining over the years from 84% in 1995 to 62% in 2001. The other type of trade, process with imported materials was largely cond ucted by FIEs and their shares have been gradually increasing from 81% in 1995 to 88% in 2001.In China’s imports (see Table 3b), processing trade is relatively small compared to exports. After it peaked at 49% in 1997, processed imports decline to 39% in 2001. The decreasing importance of SOEs can be seen in China’s imports as well. Shares by SOEs decreased from 81% in 1995 to 58% in 2001 for process & assembling, and from 18% to 7% for process with imported materials. The decreased role for SOEs in processing trade may reflect the inefficiency in conducting their business. Since 1997, the Chinese government decided to implement the shareholding system and to sell a large number of medium- and small-sized SOEs to the private sector.A number of larger enterprise groups will be established in various industries through mergers, acquisitions, and leasing and contracting. The restructuring of SOEs is intended to increase profits and to improve their competitive edge. 4. Ch ina’s Trade by Provinces and Regions A regional breakdown of exports and imports reveals important characteristics of the foreign trade in China. In 1997, 89. 1% of the total exports came from the Eastern region of China (Beijing, Tianjin, Heibei, Lioaning, Guangxi, Shanghai, Jiangsu, Zhejiang, Fujian, Shangdong, Guandong and Hainan).Within the East, the Southeast region accounts for 76. 3% of China's exports in 1997. 4 Guangdong alone produces 41. 6% of the total exports for the same year. Such regional imbalances in exporting activities persist to the present day. In 2001, Guandong's share of the national exports is 36. 0%. For the Southeast and the East, the shares are respectively 79. 0% and 91. 1%. A similar degree of unevenness in trade can be seen in the nation’s imports. For the year 1997, the East and the Southeast accounts for 91. 6% and 74. 7% of the total imports, while Guangdong imports 39. %. In 2001, the East and the Southeast again accounts for 91. 4% a nd 74. 0%. Guangdong remains the international trade powerhouse of China. In 2001, the province imports 34. 6% or more than one-third of the nation's imports. This imbalance of the regional growth in foreign trade may partially be attributed to the various geographic-specific and sequential open-door policies China has exercised throughout the last twenty years. The strong growth of the export sector in the coastal area has been supported by the massive use of foreign direct investment (FDI).FDI was first attracted by the creation of the Special Economic Zones (SEZ). FDI was concentrated in the provinces of the Southeast coast, namely, Guandong and Fujian. The multinational enterprises that are export-oriented or use advanced technologies are able to enjoy various preferential policies in the SEZs, such as reduced or exempted corporate income tax, exemption from import tariffs on imported equipment and raw materials. In 1984, fourteen coastal cities were opened and were granted simi lar policies as SEZs.Out of those fourteen cities, ten are located in the Southeast coast regions and four are in the rest of the Eastern regions. Furthermore in 1985, similar preferential policies were 4 Southeast region includes Shanghai, Jiangsu province, Zhejiang province, Fujian province, Shangdong province, Guandong province and Hainan Province. granted to other coastal economic regions, Pearl River Delta, Yangtze River Delta and Minnan Delta which is to the south of Fujian. In 1990, Pudong in Shanghai was opened and was granted extensive preferential policies.Since 1984, the Chinese government established thirty-two national-level Economic and Technological Development Zones (ETDZs) to enhance FDIs from foreign firms that are export-oriented and technologically advanced. Of those ETDZs, twenty are located in the Southeast coastal area, six are in the rest of the Eastern region, four are in the Central part of China, and only two are in the Western region of China. Thus govern ment policies which establish these economic zones attract foreign direct investment mainly in the Eastern and Southeastern regions, which lead to a concentration of exports and trade in these areas.Another reason for the unevenly high export growth in the Southeast coast is its geographic proximity to Hong Kong, Macao, and Taiwan. Since the early stages of the opening-up of China, Hong Kong has been moving their labor-intensive manufacturing industries to the Southeast of China, mainly to Guangdong, to take advantage of the abundant supply of cheap labor. These firms contributed to the fast growth of processed exports in the region. On the other hand, the Fujian Delta area became the home for many firms from Taiwan due to its geographic and cultural proximity to Taiwan.The share of exports in The Yangtze River Delta, the home of Shanghai and two provinces, Jiangsu and Zhejiang has grown steadily during the period 1997 to 2001. The share of those three regions grew to 10. 1%, 11. 0% , and 9. 1% in 2001 from 8. 1%, 7. 9% and 5. 9% in 1997, respectively. As the role of high-tech industry becomes more significant in China’s output and China’s comparative advantage in skilled-labor and capital-intensive industries becomes higher, the Yangtze River Delta becomes a new magnet for investment by foreign enterprises.These foreign investments in turn lead to more export and trade. 5. Foreign Trade by Major World Regions Using China’s official statistics, Table 4a and 4b highlight merchandise exports and imports to and from major world regions for 1993 – 2001: Asia, Africa, Europe, Latin America, North America and Oceania. As we see from Table 4a, China’s most important export region has always been Asia, which absorbs 53% of China’s exports in 2001. However, their share of absorption declines from almost 62%, their peak level of 1995.The importance of North America and Europe in China’s exports, however, has been increasin g since 1998. In 2001, North America takes in more than 22% of exports and Europe takes in more than 18%. The reliance of China’s trade on Asia can be seen in merchandise imports as well. Asia by far is the largest supplier of China’s imports. Asia accounts for more than 60% of China’s imports in 2001. Furthermore, its share has been more stable than that for exports. The next largest supplier was Europe. However, Europe’s share has been declining gradually over the period.North America has been third, with a share of more than 12% in 2001. A somewhat surprising finding is the significant increase in China’s imports from Africa. Import volume from Africa in 2001 is close to five times as big as it was in 1993. Table 4a and 4b highlight China’s reliance on the Asian market for both its imports and exports. On the other hand, North America has been more of an export market than a source of import supply. 5 5 If we take into account of re-expor ts to different regions, the shares of exports and imports to various world regions will have to be adjusted. . China’s Merchandise Exports and Imports by Major Trading Partners Table 5a and Table 5b document China’s merchandise exports to and imports from its major trading partners, using China’s official statistics. According to Table 5a, the major exports markets for China in 2001 are: the United States (20. 4%), Hong Kong (17. 5%), Japan (16. 9%) and the European Union (15. 4%). It is well-known that a large proportion of Chinese exports to Hong Kong are re-exported elsewhere so that the true size of the Hong Kong export market has to be estimated.To save space for this paper, we will just rely on the official Chinese figures. 6 Even without adjusting for re-exports, the United States in 2001 is the largest export market for China. Thus, from an international trade perspective alone, the most important bilateral trade relationship for China is the relationsh ip with the United States. Together the United States, Hong Kong, Japan and the European Union take in 70. 2% of China’s exports in 2001. Within ASEAN (Association of Southeast Asian Nations), Singapore has been the largest export market for China. In 2001, 31. % of China’s total exports to ASEAN is destined for Singapore. Within the European Union (EU), Germany is the largest market with 23. 8% of the total Chinese exports going to the EU. Turning to the import side, Japan is the largest source of China's imports. In 2001, Japan accounted for 17. 6% of China’s total imports. The European Union comes in second, with a share of 14. 7%. Taiwan and the United States are respectively third and fourth, with shares of 11. 2% and 10. 8%. Korea is fourth largest, with a share of 9. 6%. Korea’s export to China has more than quadrupled in absolute terms from $5. 6 billion in 1993 to $23. 4 billion in 2001 with its share increased from 5. 16% to 9. 6%. Another tradi ng partner that shows a growing importance as a supplier of China’s imports is ASEAN. According to official Chinese figures, in 2001, the total value of their exports to China is $23. 2 billion, which is close to four times as large as it was in 1993. We are aware that the official Chinese trade statistics do not appropriately take the large volume of re-exports via Hong Kong into account and the above comparisons of China’s exports to and import from its trading partners has to be adjusted.For the case of the United States, Fung and Lau (2001) have done detailed adjustments to the official U. S. and Chinese trade data. If we do adjust these trade figures, the two countries with the largest export markets for China in 2001 will almost surely be the United States and Japan. In fact, the United States has been the largest export market for China for quite sometime. This reiterates a point that we have made earlier: from a trade standpoint, the bilateral Sino-U. S. relati onship is the single most important relationship for China. It is essential that China takes steps to maintain the health and stability of such a relationship. . China’s Trade Regime with Entry to the WTO China formally applied to become a member of the GATT in July 1986. It is not until December 2001 that China finally entered the WTO. During these 15 years, China engaged in multilateral negotiations, as well as bilateral negotiations with 37 separate countries and areas including Japan, the United States and the European Union. Although China will enjoy its rights as a full member of the WTO, many domestic laws and regulations need to be reviewed, abolished or modified in order to enforce the WTO agreement and the protocol of accessions.China is required to implement WTO- consistent policy regimes in a wide range of areas and sectors, such as, tariffs, non-tariff6 For details of such adjustments, see Fung and Lau (2001). measures, trade-related investment measure, telecommu nications, financial sector, service sector, government procurement, etc. The following is the short and selective summary of the WTO agreement and its possible impact on China’s economy. 7. 1. Tariffs China has agreed to gradually lower its tariffs on a total of 7,151 items by 2010.Details of the expected changes in the tariff schedules are shown in Table 6. Tariffs on passenger automobiles were 80 to 100% in 1998. Tariffs were cut to 51. 9% with WTO accession and will further be decreased to 25% by 2005. Tariffs on information technology products such as computers and semiconductors will be reduced to zero and those on home appliances such as air conditioners, refrigerators, and television sets will be reduced to 10% to 20% by 2005. The average rate of tariffs on all items at the time of accession in 2001 was 13. 6%, which is scheduled to be lowered to 9. 8% in 2010.Out of 7,151 items, 977 are in agricultural products, whose average rate of tariff is scheduled to be lowered from 22. 7% to 15. 0%. The average rate of tariff on the rest of the 6,174 items, which include mining and manufacturing products, will be lowered from 16. 6% to 8. 9%. China lowered tariffs on over 5,300 items to 12% in January 2002. Currently, the average rate of tariffs on manufactured products is 11. 6%. The average tariff rate on agricultural products is 15. 8%. Cutting tariffs will benefit China’s economy by increasing efficiency and expanding a variety of goods for consumers.Increased foreign competition will challenge domestic producers to improve their competitiveness. The extent of economic benefits from reduced tariffs to foreign firms should also be significant but not as large as it seems. Since 1996, China has already cut tariffs significantly. The average tariff rate on all imports was reduced from 42% in 1992 to 17. 5% in 2000. China’s proposal to reduce the average tariffs amounts to a reduction of a little over 1% a year. But tariff rates applied in certain sectors can be significantly lower than the published rates. This is the case for high technology industry.A new foreign investment policy in 1999, for an example, allows export-oriented foreign firms to import equipment from abroad without any import duties. 7. 2. Other import restrictions China agrees to eliminate any import restrictions that are not WTO compatible, such as import quotas, import licensing, and foreign exchange control by 2005. China subjects a broad range of commodities to import quotas, including agricultural products such as grains and vegetable oils, raw materials such as fertilizer and cotton, consumer products such as color TVs, cameras, video camera recorders, automobiles, and so on.Many products that are subject to import quotas also require import licenses. Accession to the WTO requires China to comply with rules set out by various WTO Articles to ensure nondiscriminatory application of quotas and to make import licensing procedures more transparen t and simple. For example, import quotas on automobiles and parts will be eliminated by 2005. In the meantime, the value of total imports of automobiles and parts allowed will be increased by 15% each year. The elimination of these non-tariff barriers will significantly increase international competition. Protected sectors such as the utomobile industry in China will face difficult challenges from foreign competitors. But after a period of adjustments and consolidations, such industries are expected to become more efficient and competitive. 7. 3. Service Industries In accordance to WTO agreements, China will also open up its service sector to foreign competition, including distribution, insurance, banking, and telecommunications. Telecommunications, including fixed-line telephone services, cellular telephones, and internet services is one area that has been under strong government control in the past.The various restrictions imposed on the sector, such as the percentage of foreign c apital allowed and the area where foreign firms can operate, will be eliminated. A foreign nonlife insurer is permitted to establish as a branch or as a joint venture with 51% foreign ownership. A foreign life insurer is permitted 50% foreign ownership in a joint venture. Over time, geographical restrictions will also be eliminated. Within five years, foreign financial institutions are allowed to have full market access and to provide services to all Chinese clients.The financial position of the Chinese banking system is weak and foreign participation in the sector has been small. In order to improve efficiency and to gain foreign capital, some banks are expected to form strategic partnerships with foreign banks. China will also allow full trading and direct distribution by foreign firms including wholesale and retail trade and the provision of after-sale service. In sum, in all these areas, domestic Chinese entities will face stiff competition from foreign firms.But the increased c ompetition will eventually lead to increased efficiency and higher labor productivity, which will raise China's competitiveness in the world market. 8. China’s Trade Relations with Selective Trading Partners 8. 1 U. S – China Relationship A healthy Sino-U. S. economic relationship is critical to China's economic development. U. S. -China commercial ties have expanded substantially since the beginning of economic reforms. According to Chinese statistics, U. S. exports to China were $721. 1 million and imports were $270. 67 million in 1978.Those figures grew to $26. 20 billion and $54. 28 billion in 2001, respectively. China is currently the 4th largest trading partner for the United States. U. S. -China commercial ties have been strained by a number of issues. The U. S. -China bilateral trade balance has been in deficits for years and is progressively increasing. Even though professional economists view bilateral trade deficits as a result of saving-investment imbalance s and government budget deficits, U. S. policymakers continue to have great concerns with the presence of the bilateral trade imbalances.Fung and Lau (2001) have estimated that the China-United States bilateral trade balance is bigger than what the official Chinese figures indicate, but much smaller than the official U. S. official estimates. These discrepancies are due to a variety of factors, including the different ways imports and exports are measured, re-exports via Hong Kong and the re-export markups imposed by Hong Kong middlemen. Despite the fact that the bilateral trade deficits are not as large as they appear, they are still big and are growing. countries. Table 7a shows the top 15 U. S. mports from China for the years 1995 to 2000. During this period, there is a significant growth in U. S. imports of capital-intensive manufactures goods. The largest import from China has been electrical machinery, Trade imbalances remain a source of trade friction between the two which ac counts for almost 20% of total U. S. imports from China in 2000. Non-electric machinery, which includes boilers, machinery and mechanical appliance, accounts for about 8% of imports in 1995 but has grown to 13% by the year 2000. Non-electric machinery is now the second largest U.S. import item from China. There is no doubt that some of these items are processed exports from China. In other words, production in China and its subsequent export constitutes only one or several stages of the entire global production chain. The rest of the U. S. imports from China largely concentrate in low valued-added and labor-intensive products, such as toys, games, and sports equipment, footwear, furniture, apparel; and leather products. China’s accession to the WTO would likely have a significant positive effect on U. S. -China trade. A study by the U. S.International Trade Commission estimates that the United States will benefit from increasing its exports to China by $3. 1 billion. Another study by Goldman Sachs estimates that China’s WTO accession will bring an additional $13 billion to U. S. exports by 2005. Table 7b shows the top 15 U. S. exports to China for the years 1995 to 2000. As mentioned before, Chinese import quotas and licensing covers a wide range of commodities. A number of items that is important to the United States, including oilseeds, cameras, and motor vehicles have been subjected to both import licensing and quotas.Elimination of import licensing and quotas under the WTO agreement will create a positive impact on the U. S. economy by generating more exports, reducing costs for trade. At the same time, the Chinese economy will also benefit in the longer run as its domestic producers will become more efficient and more productive in the face of more intense foreign competition. The U. S. – China bilateral WTO agreement provides increased access for U. S. agricultural exports across a wide range of commodities. A tariff-rate quota (TRQ) ystem will be established to wheat, corn, rice, oilseeds, vegetable oils, sugar, wool, and cotton, which are identified as priority sectors to the United States. Under a TRQ, the same low in-quota duty is applied to each importer up to a particular amount and out-ofquota rate is applied to any imports that exceed the particular threshold amount. China still can reserve a share of imports for state trading enterprises. The institution of TRQ will provide a share of the TRQ for private traders other than state trading entities. Some U. S. sectors will benefit from significant cuts in tariffs.Overall industrial tariffs will be cut from an average of 24. 6% in 1997 to 9. 4% by 2005. Average tariffs for U. S. priority agriculture products, such as beef, grapes, wine cheese, poultry, and pork will be cut from 31. 5% to 14. 5% by 2004. A study by the U. S. International Trade Commission finds that U. S. exporters will gain from such tariff cuts by a modest amount, ranging from $1. 5 billi on to $1. 9 billion. As U. S. and China expanded their commercial relations, disputes have arisen over a wide variety of issues. One of the on-going trade frictions that the two countries face is textile trade.Under the Agreement on Textile and Clothing, the U. S. textile and clothing quotas will have to be removed by 20057. The U. S. textiles and clothing industries, which have been under the protection of quotas, will be subjected to competition with Chinese imports. But this is likely to be beneficial to both countries, as the United States eliminate the inefficient trade barriers in textile and garment. 7 The U. S. negotiated with China for a special safeguard provision to enable the United States to have additional protection against Chinese imports. 8. Japan-China Relations Japan and China have deepened their economic ties since China’s reform policy started in 1978. Japan is China’s largest trading partner, while China is Japan’s second largest trading pa rtner. The two countries together constitute Asia’s largest trading partner. Although the total volume of trade declined in 1998, it quickly recovered during the following year. According to Chinese statistics, the value of Chinese exports to Japan in 1999 is $32. 40 billion, which exceeds the value of Chinese exports in 1996 before the onset of the Asian financial crisis.There has been robust growth in the volume of trade between the two countries in 2001. Japanese exports to China have grown from $3. 11 billion in 1978 to $42. 8 billion in 2001, and Japanese imports from China have grown from $1. 72 billion in 1978 to $45. 0 billion in 2001. Table 8 takes data from official Japanese trade statistics and it shows changes in the commodity composition of Japanese exports and imports to and from China. 8 Traditionally, China has supplied Japan with agricultural goods and raw materials, while Japan supplied China with capital goods to China. In 1991, Japanese imports of oodstuff s and textile amounts to almost half of its total imports from China, while more than 70% of Japanese exports to China are capital goods. This pattern changes in the 1990s. Japanese imports of foodstuff decline to 10. 7% in 2000, and those of textile declined to 30. 3% after reaching a peak of 36. 4% in 1993. On the other hand, the shares of Chinese exports of both general machinery and electrical machinery increase dramatically from 0. 9% and 4. 0% in 1991 to 6. 9% and 15. 1% in 2000, respectively. A large proportion of the production and export of such machinery in China is processed ith imported components by Japanese affiliated firm, reflecting the increased amount of Japan’s production in the manufacturing sector in China. China concluded its bilateral trade agreement with Japan on September 4, 1999. China’s accession to the WTO would likely have a significant positive effect on SinoJapanese trade for the following reasons. First, China and Japan are important tra ding partners with each other. Second, many products subject to licensing and quotas in China are consumer electronics such as color TVs, VCRs, tape players and cameras, which are major Japanese exports.The removal of non-tariff barriers will eventually strengthen the competitiveness of the Chinese industries. At the same time, it will have a significant impact on Japanese exports. A study by the Economic Planning Agency (2000) of the Japanese government estimates that by 2005, China’s accession to the WTO will increase Japanese exports by 20. 1 billion, while raising its imports from China by 6. 5 billion. The large reduction in Chinese tariffs happens to occur in industries in which Japan has already established competitive edges, such as the automobile industry and the information technology industry.For example, in 1998, Japanese exports share of automobiles to China was 66% in terms of the value, whereas the figures for the U. S. and the EU are 10% and 7%, respectively. China cuts its tariffs on automobile imports from 80-100% to 70-80% at the beginning of 2001. Auto imports from China are expected to continue to increase. 8. 3 ASEAN – China Relations 8 Data are taken from White Paper in International Trade, MITI, Government of Japan, various years. Note that the aggregate import and export values in Table 8 differ from those taken from the official Chinese data.According to ASEAN statistics, their share of China’s trade rises significantly from 5. 8% in 1991 to 8. 3% in 20009. ASEAN has become the fifth largest trade partner of China after Japan, the United States, the European Union and Hong Kong. The change in the commodity composition in ASEAN exports to China is equally remarkable. In 1993, two of their largest export commodities to China are HS#27: mineral fuels; oils; and waxes, and HS#44: wood and articles of wood, which account for about 55% of their total exports. In 2000, however, the share of those commodities declined to pproximately 22%. In contrast, the shares of HS#84 and 85, electrical and general machinery go up from about 12% to 38% during the same period. On the imports side, electrical and general machinery are the largest and the second largest import commodities from China in 1993, and these two items continue to be the most important ones in the year 2000. However, their relative shares in total ASEAN imports from China increase dramatically from 21% in 1993 to 51% in 2000. ASEAN’s largest trading partners (excluding ASEAN itself) have always been the United States, the European Union and Japan.During the 1990s, many ASEAN members started to lose competitiveness and market shares to China. In trading with the large industrialized countries, China has been catching up to the ASEAN member countries. Table 9 shows the exports from ASEAN and China to the United States, the European Union and Japan. Compared to the 1993 Chinese exports, ASEAN’s exports to the United States, the E uropean Union and Japan are respectively 148%, 157%, and 96% larger for the same year. Similar comparisons show that China has been gaining on 9 Data are taken out from the ASEAN Trade Statistics Database.ASEAN throughout the 1990s, By 2000, ASEAN’s exports to these three key markets are only larger than those from China by 30%, 51%, and 25% respectively10. Many ASEAN member countries are concerned as China develops and finally joins the WTO. On the positive side, China’s accession to the WTO will mean greater market access for ASEAN exports to China. Chinese tariffs against ASEAN products will be cut between 34% to 47% by the year 2005 (Thitapha Wattanapruttipaisan, 2001). However, China’s accession also creates new competitiveness challenges to many ASEAN countries.There will be increased Chinese competition in ASEAN’S key export commodities in all the important markets. China’s largest export commodities are electric and general machinery (HS# X VI), which accounts for 31. 9% of their exports in 2001. Among other items, this category includes televisions, sound recorders, parts of those articles, mechanical appliances, and other machinery. Exports by ASEAN countries such as Malaysia, Philippines, and Singapore also rely heavily on these commodities. The share of electric and general machinery in total exports from Malaysia, Philippines, and Singapore in 2000 is 72. 2%, 84. 3%, and 77. 3%, respectively.Due to low wages, China may have competitive advantages in these industries. Another sector that China displays strong competitiveness is textile and clothing. During the 1990’s China has increased its market shares in key markets such as the United States, the European Union and Japan. This sector is particularly important to Thailand, Indonesia, and Philippines. For Philippines, knitted fabric (HS#61) and not-knitted fabric (HS#62) are the third and the fourth largest export commodities in 2000. China’s accessi on to the WTO will likely 10 Since the Asian crisis in 1997, China’s catching-up process appears to be accelerated ntensify competition between exporters from China and from ASEAN in both the Chinese domestic market as well as markets in the industrialized countries. 8. 4 EU – China Relation From 1978, the year when China’s economic reform started, to the year 2001, total trade volume between China and the European Union has increased more than fortyfold. In the early 1990’s, there has been frequent EU anti-dumping proceedings against China. In 1992, there were 20 anti-dumping measures against China, and the figure increases to 30 at the end of 1995 (Roger Strange, 1998).As China’s economy grows, the European Union begins to focus on fostering a more stable relationship with China. In 1995, the European Union passed a document entitled â€Å"A Long-Term Policy for China-Europe Relations. † This document emphasizes the importance of developin g more active economic engagements with China. Further EU policies toward China were set out in the 1998 communication â€Å"Building a Comprehensive Partnership with China†, which was implemented in 2001, with suggestions about concrete ways of furthering EUChina relations.Like almost all of the trading partners with China, a significant amount of trade between the European Union and China occurs as re-exports via Hong Kong. According to the Census and Statistics Department of the Hong Kong government, re-exports of Chinese goods to the European Union is $24. 3 billion in 2000. This accounts for 22. 3% of the total re-exports of goods of Chinese origin that passed through Hong Kong that year. In contrast, Hong Kong’s re-exports of goods from the European Union to China was only $6. 7 billion. This is 10. 7% of all the re-exports that go through Hong Kong to China that year.Table 10 shows the top 10 Chinese exports to and imports from the European Union. EU exports to China is highly concentrated in electrical and non-electrical machinery, accounting for 56% of its total exports to China. Although concentration on this category of exports is fairly common with China’s other trading partners, the extent of such concentration is unique to the European Union. For example, the percentage share of electrical and non-electrical machinery in U. S. total exports to China is 35. 8% in 2000 and comparable figure for Japan for the same year is 47%.In addition, electrical and non-electrical machinery are also important items on the list of EU imports from China. In 2000, this category of goods constitutes 35. 5% of total imports from China to the European Union. A bilateral EU-China agreement on China’s accession to the WTO was concluded on May 19, 2000. China agreed to cut its average import tariffs for 150 key products11 from 18. 6% to 10. 6%. These key products include spirits, cosmetics, leather articles, textiles, building materials, and m achinery and appliances. Furthermore, the agreement made specific commitment in the automobile industry.First, in two years, automobile manufacturers who have invested or will invest in joint ventures with Chinese firms will have freedom to make their own decisions regarding the class and models of the vehicle to be produced. Second, provincial authorities alone can approve automobile foreign investment projects with a value of no more than $150 million. The old limit used to be $30 million. Third, wholly foreign owned enterprises will be allowed in the automobile 11 These key products are spirits, cosmetics, leather articles, textiles, building materials, and machinery and appliances. ngine industry. Opening up the automobile sector is important to the European Union. Many European automobile manufacturers such as Volkswagen, Mercedes, Peugeot, Audi, and BMW are well established in China. Japan has been a key player in this industry in China for many years. But many European manufa cturers, particularly the Germans, have paid increasing attention to the growing Chinese market. . According to the People’s Daily (July 23, 2001), the number of automobiles imported by China from Japan in the first five month of 2001 accounts for 56% of the total imports of automobiles.However China also imports 14% of its automobiles from Germany. In the future, China may face increasing challenges in exporting to the European Union. The first challenge is the increased use of anti-dumping duties by the European Union towards China. According to China Daily (March 28, 2002), the current total number of anti-dumping cases against Chinese products launched by the European Union reaches 91, accounting for about one-fifth of the total anti-dumping cases that China faces. Second, with the launch of the Euro and plans to expand the European Union to include more members, there should be an increase of intra-EU trade.In some instances, the increase in intra-EU trade may occur at t he expense of trade with non-EU countries such as China. 9. Conclusion China has gone a considerable distance in its attempt to integrate itself to the global economy. China’s economy is an increasingly open one. In 2001, its total trade to GDP ratio reaches 44%. In December 2001, China formally joins the WTO. By joining the WTO, China binds itself to a rule-based trading system and signals to the world that it is ready to continue and even accelerate its open door reform policy. China’s trade is characterized by at least four characteristics.First, a large amount of trade is actually conducted by foreign firms in China. In 2001, 50% of Chinese trade is carried out by foreign-invested firms. Second, a very high percentage of Chinese trade is processed trade. In 2001, 47% of Chinese trade is related to processing. Furthermore, of the processed trade, 73% is conducted by foreign-invested enterprises. Third, there is a large amount of re-exports in China’s interact ions with the world. In 2001, 39% of China’s exports go through Hong Kong to be re-exported elsewhere. Lastly, China’s trade is geographically concentrated.In 2001, 35. 3% of Chinese trade originates from one province, viz. Guangdong. What might we expect to see in the future? With increased integration in the global economy, the prominent role of foreign firms in China’s trade will likely continue. The presence of foreign firms in Chinese trade reflects also the increased use of global outsourcing as a competitiveness strategy by multinationals from the industrialized economies. With low wages and a large pool of high quality labor, China has become a critical link in the global network of production fragmentation.At the same time, as China continues to grow, more and more of the foreign-invested firms, particularly those from the United States, Japan and the European Union, are set up to sell to the booming domestic Chinese market. While processed trade should remain an important feature of Chinese trade, it is no longer confined to low-tech and low value-added activities. U. S. high-technology companies continue to subcontract to firms in Taiwan. The same Taiwanese firms are moving or subcontracting to the Mainland. China has also become an important market for information technology (IT) products.According to the American Electronics Association (AEA), the largest umbrella industry group of high-technology companies in the United States, China is now the third largest IT market in the world. In fact, due to its own estimation of the importance and growth of China’s IT market, Silicon Valley acted as one of the most vocal and strongest supporters for China to join the WTO. In the near future, we can expect to see that China’s trade will be increasingly high-tech. The share of re-exports in China’s trade has declined in recent years. It is expected that this trend will continue.As China’s trade regime becomes more rule-based and more transparent, Chinese trade will also become more direct. With its advanced infrastructure in finance, insurance, shipping and telecommunications, Hong Kong remains a favorite site for multinationals to set up and maintain its regional headquarters. Hong Kong will continue to play an important role in coordinating the global supply chains involving parents of multinationals and specialized suppliers located in China and other Asian countries. The share of trade conducted by Guangdong province remains high.But there are indications that Shanghai and the Yangtze River Delta have taken an increasing active role in the last few years. Over time, we may expect to see that there is some mild diversification in the share of trading activities away from Guangdong. In the future, we see that there are at least two challenges facing China in the area of international trade. First, with China’s competitiveness growing, many countries will perceive that their prod ucers will not be able to compete with the Chinese exports, either in the third market or in their own domestic market. The backlash will take the form of n increased use of anti-dumping duties and safeguards. We have already seen the use of such trade instruments against China from a variety of countries, including Japan, the European Union and the United States. A relatively new development is that even developing countries such as India and Mexico are using anti-dumping measures against Chinese exports to their countries. The difficulty with anti-dumping duties is that they are generally WTO-consistent. Thus joining the WTO does not mean that other countries will reduce their use of anti-dumping duties against China.A second challenge facing China is how to manage its trade relationship with the United States. The United States is the largest economy on earth. The United States is China’s largest export market. It is also a critical source of technology. A stable and healt hy relationship with the United States is important for China’s economic development. It is always a difficult adjustment process for countries to accept a newly emergent economic power. The United States as well as other countries may perceive China as a potential economic threat.Judging from the experience of the relationship between the United States and a rising Japan in the 1970s and the 1980s, it will not be too hard to imagine that there will be difficulties in the trade relationship between the United States and China. Managing and smoothing such a relationship should be an important goal for China. References: Almanac of China’s Foreign Economic Relations and Trade, Beijing: China Foreign Economic Relations and Trade Publishing, various years. Association of Southeast Asian Nations, ASEAN Database, various years. Chen, Xikang, Leonard Cheng, K. C. Fung and Lawrence J.Lau, â€Å"The Estimation of Chinese Domestic Value Added Induced by Chinese Exports to the U nited States,† Department of Economics, Stanford University, mimeo. Cheng, L. , L. Qiu and Keith Wong, 2001, â€Å"Antidumping Measures as a Tool of Protectionism: A Mechanism Design Approach,† Canadian Journal of Economics, 34(3), 639-660. China’s Customs Statistics Monthly, December, Beijing: General Administration of Customs of the People’s Republic of China, various years. China Statistical Yearbook, Beijing: China Statistical Press, various years. Fung, K. C. , 1998, â€Å"Accounting for Chinese Trade: Some National and RegionalConsiderations,† in R. Baldwin, R. Lipsey and J. David Richardson (ed. ) Geography and Ownership as Bases for Economic Accounting, NBER Conference Volume, Chicago: University of Chicago Press. Fung, K. C. and Lawrence J. Lau, 2001, â€Å"New Estimates of the United States-China Bilateral Trade Balances,† Journal of Japanese and International Economies, December. Naughton, B. , 1996, â€Å"China’s Emergence and Prospects as a Trading Nation,† Brookings Papers on Economic Activity, 2. Sung, Yun-Wing, 1991, The China-Hong Kong Connection, Cambridge: Cambridge University Press.Sung, Yun Wing, Pak Wai Liu, Richard Yue-Chim Wong and Pui King Lau, 1995, The Fifth Dragon: The Emergence of the Pearl River Delta, Singapore: Addison Wesley Publishing Company. Wong,Richard, Y. C. , 1995, â€Å"China’s Economic Reform—The Next Step,† Contemporary Economic Policy, 13:18-27. White Paper in International Trade, MITI, Tokyo: Government of Japan, various years. Woo, Wing T. , 2001, â€Å"Recent Claims of China’s Exceptionalism: Reflections Inspired by WTO Accession,† China Economic Review, 12, No. 2/3. WTO, 2002, â€Å"China Accession to the World Trade Organization,† mimeo.Table 1 China's Foreign Merchandise Trade Year 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Trade Volume (US $ billion) Total Exports Imports 20. 7 29. 4 38. 1 44 41. 6 43. 6 53. 5 69. 7 73. 8 82. 7 102. 8 111. 7 115. 4 135. 7 165. 6 195. 8 236. 7 280. 9 289. 9 325. 2 323. 9 360. 6 473. 3 509. 8 9. 8 13. 7 18. 1 22 22. 3 22. 2 26. 1 27. 4 30. 9 39. 4 47. 5 52. 5 62. 1 71. 9 85 91. 8 121 148. 8 151 182. 8 183. 7 194. 9 249. 2 266. 2 10. 9 15. 7 20 22 19. 3 21. 4 27. 4 42. 3 42. 9 43. 2 55. 3 59. 1 53. 63. 8 80. 6 104 115. 7 132. 1 138. 8 142. 4 140. 2 165. 7 225. 1 243. 6 Balance -1. 1 -2 -1. 9 0 3 0. 8 -1. 3 -14. 9 -12 -3. 8 -7. 8 -6. 6 8. 7 8. 1 4. 4 -12. 2 5. 3 16. 7 12. 2 40. 4 43. 5 29. 2 24. 1 22. 5 Total 100 142 184 213 201 211 258 337 357 400 497 540 557 656 800 946 1,143 1,357 1,400 1,571 1,565 1,742 2,287 2,463 Index 1978=100 Exports Imports 100 140 185 224 228 227 266 280 315 402 485 536 634 734 867 937 1,235 1,518 1,541 1,865 1,875 1,989 2,543 2,716 100 144 183 202 177 196 251 388 394 396 507 542 490 585 739 954 1,061 1,212 1,274 1,306 1,287 1,520 2,065 2,234Source: China's Cust oms Statistics, various years, General Administration of Customs of the People's Republic of China. Note: The figures are in US$ billion. Exports are valued on a f. o. b. basis, imports on a c. i. f. basis. Table 2a Composition of China's Export (US$100million) Total Primary goods total food Manufacture goods raw beveraes materials mineral oil total chemicals textile machinery miscel. others 1980 181. 19 91. 14 29. 85 0. 78 17. 11 42. 8 0. 6 90. 05 11. 2 39. 99 8. 43 28. 36 2. 07 1981 220. 07 102. 48 29. 24 0. 6 19. 48 52. 28 0. 88 117. 59 13. 42 47. 06 10. 87 37. 25 8. 99 1982 223. 1 100. 5 29. 08 0. 97 16. 53 53. 14 0. 78 122. 71 11. 96 43. 02 12. 63 37. 05 18. 05 1983 222. 26 96. 2 28. 53 1. 04 18. 92 46. 66 1. 05 126. 06 12. 51 43. 65 12. 21 38. 04 19. 65 1984 261. 39 119. 34 32. 32 1. 1 24. 21 60. 27 1. 44 142. 05 13. 64 50. 54 14. 93 46. 97 15. 97 1985 273. 5 138. 28 38. 03 1. 05 26. 53 71. 32 1. 35 135. 22 13. 58 44. 93 7. 72 34. 86 34. 13 1986 309. 42 112. 72 44. 48 1. 19 29 . 08 36. 83 1. 14 196. 7 17. 33 58. 86 10. 94 49. 48 60. 09 1987 394. 37 132. 31 47. 81 1. 75 36. 5 45. 44 0. 81 262. 06 22. 35 85. 7 17. 41 62. 73 73. 87 1988 475. 16 144. 06 58. 9 2. 35 42. 57 39. 0. 74 331. 1 28. 97 104. 89 27. 69 82. 68 86. 87 1989 525. 38 150. 78 61. 45 3. 14 42. 12 43. 21 0. 86 374. 6 32. 01 108. 97 38. 74 107. 55 87. 33 1990 620. 91 158. 86 66. 09 3. 42 35. 37 52. 37 1. 61 462. 05 37. 3 125. 76 55. 88 126. 86 116. 25 1991 718. 43 161. 45 72. 26 5. 29 34. 86 47. 54 1. 5 556. 98 38. 18 144. 56 71. 49 166. 2 136. 55 1992 849. 4 170. 04 83. 09 7. 2 31. 43 46. 93 1. 39 679. 36 43. 48 161. 35 132. 19 342. 34 NA 1993 917. 44 166. 66 83. 99 9. 01 30. 52 41. 09 2. 05 750. 78 46. 23 163. 92 152. 82 387. 81 NA 1994 1,210. 06 197. 08 100. 15 10. 02 41. 27 40. 69 4. 95 1,012. 98 62. 6 232. 18 218. 95 499. 37 0. 12 1995 1,487. 80 214. 85 99. 54 13. 7 43. 75 53. 32 4. 54 1,272. 95 90. 94 322. 4 314. 07 545. 48 0. 06 1996 1,510. 48 219. 25 102. 31 13. 42 40. 45 59. 31 3. 76 1,291. 23 88. 77 284. 98 353. 12 564. 24 0. 12 1997 1,827. 92 239. 53 110. 75 10. 49 41. 95 69. 87 6. 47 1,588. 39 102. 27 344. 32 437. 09 704. 67 0. 04 1998 1,837. 57 206 106. 19 9. 76 35. 17 51. 81 3. 07 1,631. 57 103. 16 323. 83 502. 33 702. 2 0. 05 1999 1,949. 31 199. 41 104. 58 7. 71 39. 21 46. 59 1. 32 1,749. 90 103. 73 332. 62 588. 36 725. 1 0. 09 2000 2,492. 03 254. 6 122. 82 7. 45 44. 62 78. 55 1. 6 2,237. 43 120. 98 425. 46 826 862. 78 2. 21 2001 2,661. 54 263. 53 127. 79 8. 74 41. 73 84. 16 1. 11 2,398. 01 133. 53 438. 23 949. 18 871. 23 5. 85 Source: China Statistical Yearbook 2001, China's Customs Statistics Monthly, December 2001 Note: Since 1992 and 1993, there has been a change in the classification system for for categories like â€Å"Others†. tem † Table 2b Composition of China's Import (US$100 million) Manufacture goods raw total food beveraes materials mineral oil total chemicals textile machinery miscel. others 1980 200. 17 69. 59 29. 27 0. 36 35. 5 4 2. 03 2. 39 130. 58 29. 09 41. 4 51. 19 5. 42 3. 34 1981 220. 15 80. 44 36. 22 2. 13 40. 27 0. 83 0. 99 139. 71 26. 06 40. 35 58. 66 5. 58 9. 06 1982 192. 85 76. 34 42. 01 1. 3 30. 12 1. 83 1. 08 116. 51 29. 36 39. 06 32. 04 4. 86 11. 19 1983 213. 9 58. 08 31. 22 0. 46 24. 59 1. 11 0. 7 155. 82 31. 83 62. 89 39. 88 7. 82 13. 4 1984 274. 1 52. 08 23. 31 1. 16 25. 42 1. 39 0. 8 222. 02 42. 37 73. 18 72. 45 11. 82 22. 2 1985 422. 52 52. 89 15. 53 2. 06 32. 36 1. 72 1. 22 369. 63 44. 69 118. 98 162. 39 19. 02 24. 55 1986 429. 04 56. 49 16. 25 1. 72 31. 43 5. 04 2. 05 372. 55 37. 71 111. 92 167. 81 18. 77 36. 34 1987 432. 16 69. 15 24. 3 2. 63 33. 21 5. 39 3. 49 363. 01 50. 08 97. 3 146. 07 18. 78 50. 78 1988 552. 75 100. 68 34. 76 3. 46 50. 9 7. 87 3. 69 452. 07 91. 39 104. 1 166. 97 19. 82 69. 79 1989 591. 4 117. 54 41. 92 2. 02 48. 35 16. 5 8. 75 473. 86 75. 56 123. 35 182. 07 20. 73 72. 15 1990 533. 45 98. 53 33. 35 1. 57 41. 07 12. 72 9. 82 434. 92 66. 48 89. 06 168. 45 21. 03 89. 9 1991 637. 91 108. 34 27. 99 2 50. 03 21. 13 7. 19 529. 57 92. 77 104. 93 196. 01 24. 39 111. 47 1992 805. 85 132. 55 31. 46 2. 39 57. 75 35. 7 5. 25 673. 3 111. 57 192. 73 313. 12 55. 88 NA 1993 1,039. 59 142. 1 22. 06 2. 45 54. 38 58. 19 5. 2 897. 49 97. 04 285. 27 450. 23 64. 95 NA 1994 1,156. 14 164. 86 31. 37 0. 68 74. 37 40. 35 18. 09 991. 28 121. 3 280. 84 514. 67 67. 68 6. 79 1995 1,320. 84 244. 17 61. 32 3. 94 101. 59 51. 27 26. 05 1,076. 67 172. 99 287. 72 526. 42 82. 61 6. 93 1996 1,388. 33 254. 41 56. 72 4. 97 106. 98 68. 77 16. 97 1,133. 92 181. 06 313. 91 547. 63 84. 86 6. 46 1997 1,423. 70 286. 2 43. 04 3. 2 120. 06 103. 06 16. 84 1,137. 50 192. 97 322. 2 527. 74 85. 5 9. 09 1998 1,401. 66 229. 52 37. 93 1. 79 107. 16 67. 73 14. 91 1,172. 14 201. 66 310. 71 567. 68 84. 55 7. 54 1999 1,656. 99 268. 46 36. 19 2. 08 127. 89. 12 13. 67 1,388. 53 240. 3 243. 17 694. 53 97. 01 13. 52 2000 2,250. 94 467. 39 47. 58 3. 64 200. 03 206. 37 9. 77 1,783. 55 302. 13 418. 07 919. 31 127. 51 16. 53 2001 2,436. 13 457. 74 49. 76 4. 12 221. 28 174. 95 7. 63 1,978. 40 321. 06 419. 39 1,070. 42 150. 76 16. 77 Source: China Statistical Yearbook 2001, China's Customs Statistics Monthly, December 2001. Note: Since 1992 and 1993, there has been a change in the classification system for categories like â€Å"Others†. Total Primary goods Table 3a Exports by Type of Enterprise and by Customs Regime (US$ billion) 1995 1996 1997 1998 Total 148. 151. 1 182. 7 183. 8 Process and Assembly 20. 7 24. 2 29. 4 30. 7 Process with Imported Materials 53 60. 1 70. 2 73. 7 Process and Assembly Total SOE FIE sub total Process with Imported Materials Total SOE FIE sub total 1995 20. 7 17. 3 2. 9 1995 53 13. 4 39. 2 1996 24. 2 19 4. 5 1996 60. 1 10. 9 48. 6 1997 29. 4 22. 3 6. 1 1997 70. 2 11. 7 57. 7 1998 30. 7 22. 5 7. 2 1998 73. 7 10. 9 62 1999 194. 9 35. 8 75. 1 1999 35. 8 24. 2 10. 4 1999 75. 1 9. 8 64. 2 2000 249. 2 41. 1 96. 5 2000 41. 1 26. 5 13. 1 2000 96. 5 10. 4 84. 1 2001 266. 2 42. 2 105. 2 2001 42. 2 26 14. 3 2001 105. 2 9. 9 92. Table 3b Imports by Type of Enterprise and by Customs Regime (US$ billion) Total 1995 1996 1997 1998 Process and Assembly 132. 1 138. 8 142. 4 140. 2 Process with Imported Materials 16. 2 17. 8 20. 9 19. 9 42. 1 44. 5 49. 3 48. 7 Process and Assembly Total SOE FIE sub total Process with Imported Materials Total SOE FIE sub total Source: China's Customs Statistics, various years. 1995 16. 2 13. 2 2. 7 1995 42. 1 7. 4 34. 4 1996 17. 8 13. 6 3. 7 1996 44. 5 6. 5 37. 8 1997 20. 9 15. 4 4. 9 1997 49. 3 6. 1 42. 9 1998 19. 9 14. 2 5 1998 48. 7 5. 1 43. 2 1999 165. 7 23. 6 50 1999 23. 6 15. 4 7. 1999 50 4. 3 45. 3 2000 225. 1 28 64. 6 2000 28 17. 4 9. 7 2000 64. 6 4. 8 58. 9 2001 243. 6 28. 9 65. 1 2001 28. 9 16. 9 10. 8 2001 65. 1 4. 3 59. 5 Table 4a China's Exports to Major World Regions (US$ billion) Export To Total Asia North Anerica Europe Latin America Oceania Africa 1993 91. 74 52. 62 18. 16 16. 43 1. 78 1. 23 1. 53 1 994 121 73. 45 22. 86 18. 77 2. 45 1. 72 1. 75 1995 148. 77 92 26. 24 22. 98 3. 15 1. 9 2. 49 1996 151. 07 91. 25 28. 3 23. 87 3. 12 1. 96 2. 57 1997 182. 7 108. 92 34. 6 28. 96 4. 61 2. 4 3. 21 1998 183. 71 98. 18 40. 1 33. 43 5. 32 2. 66 4. 06 1999 194. 93 102. 8 44. 39 35. 47 5. 27 3. 11 4. 11 2000 249. 21 132. 31 55. 28 45. 48 7. 19 3. 91 5. 04 2001 266. 15 140. 96 87. 88 49. 24 8. 24 4. 07 6. 01 Table 4b China's Imports from Major World Regions (US$ billion) Import From Total Asia North America Europe Latin America Oceania Africa 1993 103. 96 62. 6 12. 07 23. 97 1. 93 2. 36 1 1994 115. 62 68. 77 15. 74 25. 02 2. 25 2. 92 0. 89 1995 132. 08 78. 05 18. 8 27. 81 2. 97 3. 02 1. 43 1996 138. 84 83. 44 18. 73 27. 66 3. 61 3. 94 1. 46 1997 142. 36 88. 4 18. 31 25. 75 3. 77 3. 67 2. 46 1998 140. 24 87. 05 19. 2 26. 31 2. 99 3. 14 1. 48 1999 165. 72 101. 9 21. 82 32. 65 2. 99 4. 19 2. 38 2000 225. 1 141. 34 26. 12 40. 78 5. 41 5. 88 5. 56 2001 243. 61 147. 18 30. 24 48. 4 6. 7 6. 29 4. 79 Source: China's Customs Statistics, various years Table 5a Merchandise Exports to Major Trading Partners (US$ Billion) 1993 91. 74 22. 05 1. 46 15. 78 2. 86 16. 96 12. 24 3. 97 1. 29 1. 61 1. 3 1. 93 4. 68 2. 25 1994 121 32. 36 2. 24 21. 58 4. 38 21. 46 15. 39 4. 76 1. 42 2. 27 1. 59 2. 41 6. 38 2. 56 1995 148. 77 35. 98 3. 1 28. 46 6. 69 24. 71 19. 09 5. 67 1. 84 3. 23 2. 07 2. 79 9. 04 3. 5 1996 151. 07 32. 91 2. 8 30. 87 7. 51 26. 69 19. 83 5. 84 1. 91 3. 4 1. 84 3. 2 9. 7 3. 75 1997 182. 7 43. 78 3. 4 31. 82 9. 12 32. 69 23. 81 6. 49 2. 33 4. 4 2. 24 3. 81 12.