The consequences of China WTO accession on the Malaysian business

Abstract

The Chinese economic miracle has helped fuel economic growth in the Asia-Pacific region. Malaysia, in particular, stands to benefit handsomely from China's fortunes. Malaysia-China bilateral trade recorded 50 per cent growth in the first seven months in year 2002. More importantly, Malaysia was China's 7th largest trading partner globally and largest trading partner amongst the ASEAN countries. Even so, there is room for even greater cooperation between the two countries, as China will offer the world and particularly its neighbors with at least RM5.7 trillion worth of trade in goods. China's WTO membership has further improved market access for Malaysia's products. Thus China can be viewed as a most viable overseas market for Malaysian enterprises. This paper intends to highlight the major consequences of China's WTO accession on the Malaysian business in the post-WTO entry period using simple graphical approach. Results suggest marked improvement with respect to trade and but a decline in FDI flow to Malaysia as at the third quarter of 2003.