On 23 September 2013, the World Bank released its latest per capita Gross National Income (GNI) rankings for calendar year 2012. The data for countries that are “close” to China in per capita GNI (i.e., in reasonable proximity to the band fixed by the current surrogate countries) are set forth in the table below.
The latest year data shows a substantial increase for China, the most frequent non-market economy country investigated under U.S. antidumping laws. Between 2011 and 2012, China per capita GNI jumped from $4,950 to $5,680 an increase of almost 15%. Nevertheless, it does not appear that a major change in the U.S. Department of Commerce standard list of potential surrogates is on the horizon, as most of the countries currently on the list experienced similar year-to-year growth rates. Countries that may be “on the bubble” include:
- Philippines: Of the six countries on the current surrogate candidate list, Philippines remains at the bottom in terms of per capita GNI. However, Philippines GNI increase of 12% was only slightly lower than the 15% increase for China. Thus, its GNI as a percent of China’s decreased by only 1% compared to 2011. At 44%, this ratio remains well above the 33% rate for India in 2009, which was the data used by the DOC in 2011 to drop that country from its list of potential surrogate countries.
- Costa Rica: While solidly within the band of per capita GNIs established by the list of current surrogate country candidates, Costa Rica is somewhat of an anomaly when compared to those other countres. As the table shows, Costa Rica is the only country on the current list with a total GNI of less than US$ 50 billion. Moreover, at a total of less than 5 million, Costa Rica’s population is far smaller than the next smallest population of the current surrogate candidates (Peru, at 29 million). To date, we do not believe that DOC has used Costa Rica as a surrogate country in any Chinese investigation or annual review. Thus, it is not clear if there are any compelling reasons to keep it on the list.
- Mexico: As China continues to grow at rapid rates, Mexico is drawn closer into the band that appears to be acceptable to the DOC for purposes of choosing standard surrogate candidates. In fact, in 2012, its per capita GNI is fractionally closer to China than is that for Philippines. Mexico has some other characteristics that may make it an attractive surrogate country. Although the DOC does not consider the total size of the economy to be important, the fact is that the Mexican economy is closer to that of China in terms of total GNI than any of the standard countries on the current list. In addition, Mexico has an established and growing manufacturing sector. Finally, financial statements for public companies in Mexico are publicly available. Thus, if not this year, it is possible that Mexico could find itself on the DOC surrogate country list for China sometime in the near future.
Finally, a few words about India. For many years the most popular surrogate country choice, India was dropped by the DOC in 2011, apparently because of the growing disparity between its per capital GNI and that for China. The most recent data indicate that the gulf, expressed at India per capita GNI to China per capita GNI, is growing: from 33% in 2009 to 27% in 2011. While Indian growth rates in the past 20 years have been high by that country’s historic standards, the Chinese economy has grown much faster. Nevertheless, in terms of total population and total economy, India remains closer to China than any of the current surrogate countries.
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