Demand from emerging markets boosts Chinese exports
China’s exports are expected to grow in the coming months as demand picks up from the ASEAN countries (Association of Southeast Asian Nations) and India in particular, new Customs data has indicated.
Despite the general slowdown in the world economy, the figures show exports to emerging markets in the first seven months of the year grew strongly.
“The fast growth in exports to emerging markets reflects the improving economic and trade ties between China and those economies, and the momentum is expected to continue,” said Bai Ming, deputy director of the international market research department at the Chinese Academy of International Trade and Economic Cooperation (CAITEC ) in Beijing.
“Thanks to that, China’s exports are expected to remain resilient, despite the economic recession facing the developed economies and the protectionist approach to trade adopted by the United States and some European countries,” Bai added.
According to China’s General Administration of Customs, the country’s exports to ASEAN, its largest trading partner, grew by a healthy 19% from a year ago to 2.05 trillion yuan ($300 billion) during the first seven months of the year.
Analysts said the growth in exports was partly due to improvements in the supply chain in China, and also because of increased production in the economies China exports to, which ramped up demand for raw materials and other goods from China.
According to a new report from Hua Chuang Securities, China’s exports were to a large extent driven by the growing demand in developed economies as they emerged from Covid lockdowns in 2021. But as their economies stalled, their contribution to China’s export growth slumped.
To counter this, China’s exports to emerging markets, especially the ASEAN member countries and India, have increased in recent months, relative to the pre-pandemic levels, the report stated.
From 2016 to 2019, India, Indonesia and Brazil accounted for 2.5%, 1.3% and 1.7% of China’s total exports. In recent months, the corresponding figures rose respectively to 2.7%, 1.5% and 2%, the report stated.
CAITEC’s Bai said the business pick-up in emerging markets since the Covid outbreaks, and more importantly, the huge economic potential in those developing economies, will ensure that they will have increasing demand for Chinese products for a long period.
“Chinese products are highly competitive in global markets thanks to their high quality and relatively low prices, and can well meet demand from economies seeking sustained and fast growth,” Bai said.
Sector-wise, according to the Hua Chuang Securities report, China has significantly increased exports of chemicals, textile raw materials, textile products and base metal products to ASEAN this year.
Exports of chemicals, plastic and rubber products, base metal products, and mechanical and electrical products to India, as well as exports of chemicals, mechanical and electrical products, and textile raw materials to Brazil, have also grown sharply.
However, Gao Lingyun, director of the international investment division at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences, said “Chinese enterprises need to reduce production costs and rise in the global value chain, to sustain and improve the competitiveness of Chinese goods in global markets”.
He added: “The Chinese authorities also need to ramp up efforts to improve the local business climate so that enterprises can cut indirect costs.”
Imports also on the rise
Combined, China’s trade in goods with the rest of the world jumped 10.4% year-on-year to 23.6 trillion yuan ($3.5 trillion) during the first seven months of the year.
In total, exports rose 14.7 % year-on-year to 13.37 trillion yuan, while imports increased 5.3% from a year ago to 10.23 trillion yuan, according to the General Administration of Customs (GAC).
From January to July, China’s trade with Belt and Road countries and other members of the Regional Comprehensive Economic Partnership (RCEP) soared by 19.8% and 7.5% year-on-year.
The Belt and Road initiative is a global infrastructure development strategy adopted by the Chinese government in 2013, to invest in nearly 70 countries and international organisations.
In July, trade with RCEP partners reached 1.17 trillion yuan, up 18.8% year-on-year, boosting the overall foreign trade growth by 5.6 percentage points, said Li Kuiwen, spokesperson for the GAC.