Orange County exports are expected to surge 15% this year to more than $14 billion and top $20 billion by 2004, thanks to a rebounding Asia, a more open China and a robust Mexico, according to a report issued last week by California State University, Fullerton.
“The economic recovery of Asia and lowering of Chinese trade barriers will bring strong growth in high-tech and human capital-intensive exports,” said Vincent Dropsy, an economics professor and research associate with the Institute for Economic and Environmental Studies at Cal State Fullerton. “These are areas where OC has built a strong competitive advantage.”
The projected upswing in OC exports comes after a slowdown in shipments in 1998 and a more modest uptick last year. OC’s 1999 exports reached $12.6 billion, or 12% of the county’s gross domestic product. Export-related jobs also accounted for about 223,000 jobs in 1999, or 17% of the county’s non-agricultural employment for that year, according to the report.
Dropsy sees local exports resuming a similar growth pattern as seen in the early 1990s, with economic recovery in key markets such as South Korea and Taiwan. China’s pending entry into the World Trade Organization,and related economic reforms,also should provide a boost, he said. “In cumulative terms, OC exports to China for 2000 to 2004 would rise by a $381 million, or 121% of its 1999 level,” Dropsy said.
Dropsy predicts Chinese tariffs will be lowered 2% annually during the next four years, based on liberalization proposals made by China during trade negotiations. He estimates the impact of liberalization proposals on OC exports to China to yield an export increase of 1.7% in 2000, 7.6% in 2001, 14.2% in 2002, 21.1% in 2003 and 28.4% in 2004.
Today, China is a small export market for OC companies, ranking 11th on the list of the county’s top export destinations. But Dropsy predicts it will become the eighth biggest export market by 2004, and provide what he termed “an important boost to Orange County exports in the long term.”
Dropsy also sees continued growth in shipments to Mexico, which overtook Japan as the county’s largest export market last year. Mexico’s recovery from the economic downturn of the 1990s and the North American Free Trade Agreement are key drivers of local export growth, he said.
Dropsy’s forecast assumes that economic growth in OC’s second-largest export market, Japan, will resume, and that there won’t be any major currency crises in Mexico or other major export markets in the next four years. n
