China’s export growth dips as focus shifts to domestic economy
China’s exports are steadily falling as a share of gross domestic product in a decline that could soon make the country less reliant than India on sales abroad, according to the Financial Times.
The shift highlights the growth in the Chinese domestic economy, which could make Beijing better able to withstand trade tensions under US president Donald Trump, who has threatened to hit the country with punitive tariffs.
“It’s not that since then we haven’t seen any export growth, but global trade is growing significantly slower than China’s own economy,” Louis Kuijs, head of Asia economics at Oxford Economics told the FT.
“Since 1991 China has had a phenomenal rise in terms of the integration of its manufacturing sector in the global economy, but even before the global financial crisis that picture started to change.”
China exported $1.65trillion of goods and services in the first three quarters of 2016, a 7.2% fall from the same period a year before. Its ration of exports to GDP stood at 20.2% - a marked fall from the 2006 peak of 38.6%, according to FT calculations.
This marked China’s lowest export ratio during the century to date, although in 1979, as Beijing opened up to the world, exports’ contribution to GDP was just 6.4%, the FT stated.
The country’s rise as an exporting dynamo was driven by a concerted push to develop a low-cost manufacturing sector, integrate it into the global economy and grab a market share.
Aided by sales of products ranging from smartphones to socks, the country now accounts for roughly 12% of global exports, the newspaper maintained. Kujis argued this makes it steadily harder to increase the share further.
Meanwhile, China’s government has been attempting to reorient the country away from export-led growth towards domestic consumption.
This story was written by Liz Gyekye, editor of Bioenergy Insight and Biofuels International.