In the late 1990s, Asia suffered a devastating financial crisis that not only squashed its economic growth, but also impacted the world’s economy. Today, however, Asia’s economic outlook appears bright — and even though Asian growth rates will slow in the short-term, U.S. exporters may wish to reconsider pursuing Asian markets.

World Demand Severely Affects Asian Growth

Many Asian economies, including Hong Kong, China, and South Korea, experienced exponential growth in the 1990s, much of which can be attributed to IT (information technology) output. In mid 2000, this changed when U.S., European, and other economies began to slow.

For example, the U.S., which consumes nearly half of the world’s IT products, decreased its demand. As a result, Asian output and economic growth were adversely impacted. Consequently, Asian gross domestic product (GDP) growth is expected to decline from 7% in 2000 to approximately 5% this year. Yet, this rate is still among the world’s fastest.

U.S. FDI in Asia Is Up

U.S. foreign direct investment (FDI) in Asia continues to grow. In 1999, on a historical-cost basis, it reached $146 billion, up from $118 billion in 1998. Japan was the largest recipient of U.S. FDI, receiving $48 billion in 1999. Following were Singapore, Hong Kong, Indonesia, South Korea, China, Thailand, and Taiwan.

Exports to Japan Are Up; Growth Is Slow

Japan is the world’s second largest economy and third largest U.S. export market. In 2000, the U.S. exported $65.3 billion to Japan. This represented an increase of 13.6% since 1999. However, Japan’s GDP growth rate registered 1.7% in 2000, and is forecasted to grow by 1% in 2001 and 1.1% in 2002.

China’s Economy Continues To Blossom

After years of declining growth, China’s GDP rate rose 8% in 2000, and is anticipated to reach 7.5% and 7.8% in 2001 and 2002. The U.S. exported $16.2 billion to China in 2000 — an increase of 24% over 1999. U.S. FDI in China, on a historical-cost basis, is considered small at $6.5 billion. However, China is likely to join the World Trade Organization this year, and as part of its accession agreement, China has committed to significantly reduce trade barriers, which is likely to accelerate Chinese imports and attract greater investment.

Hong Kong Experienced a Growth Spurt

U.S. exports to Hong Kong were $14.6 billion in 2000, up 15.6% over 1999. Hong Kong’s GDP growth rate rose significantly from 3.1% in 1999 to 10.5% in 2000, and is projected at 4% and 5.5% in 2001 and 2002. The absence of trade barriers has fueled Hong Kong’s economy. Plus, it has made good progress in addressing copyright piracy.

South Korea Is on the Right Path

South Korea’s GDP slowed to 8.8% in 2000, and is anticipated to reach 4.2% and 5.5% in 2001 and 2002. The South Korean economy bounced back from the Asian financial crisis rather quickly, and its economy is undergoing solid reform, especially in the financial and corporate sectors. U.S. exports to South Korea reached $27.9 billion in 2000, a 21.5% increase over 1999.

Taiwan’s Diagnosis Is Favorable

Taiwan’s economy is expanding. In 2000, its GDP growth increased 6%, up from 5.4% in 1999. Projections for 2001 and 2002 are 5.1% and 5.8%. The U.S. exported $21.4 billion to Taiwan in 2000, up 27.4% from 1999.

Time to Reassess Your Target Markets

Leading U.S. exports to Asia include computers, peripherals and software, aircraft and parts, electronics, telecommunications, scientific and medical equipment, and pharmaceuticals. As the region improves economically, you may wish to pursue in-depth research and reassess your target markets since Asian trade and investment opportunities are likely to rise.

This article appeared in April 2001. (CB)

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the, is a world-recognized speaker, author and an international columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

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