Introducing the new Dredging and Port Construction website - providing you with the latest news, commentary and ana… https://t.co/jJn1duEDT7
The Trade Numerologist: China’s B Plans If U.S. Cuts Imports
The winds of global trade are shifting, and they are bound to impact China, the world’s biggest exporter.
A recent report by the Trump administration bemoaned China’s 2001 accession to the World Trade Organization, which busted open markets, especially in Europe and the U.S., which quickly became Beijing’s best customer.
“We’ve noticed recently that protectionist voices have been rising in the U.S.,” Gao Feng, a Chinese trade spokesman, told reporters recently.
A expansion of policies that limit imports and boost domestic production in key economies would be a big deal in China, which has exported its way to prosperity more than any other country on its road to industrialization.
Over the past 20 years, China has leapfrogged the U.S., Germany and Japan to become world’s top exporter, thanks to a comprehensive export strategy that involved devaluing its currency, subsidizing national champions and aggressively investing in energy and infrastructure.
Despite the Trumpian protectionist rhetoric on trade, the U.S. remains the biggest buyer of goods Made in China, especially electronics, followed by three Asian countries, Japan, South Korea and Vietnam. Nine of China’s ten biggest trading partners increased their shipments in 2017.
China’s top export partners, first 11 months of 2017
|U.S. $390.2 billion (+11%)|
|Japan $124.2 billion (+5%)|
|South Korea $93.5 billion (+9.1%)|
|Vietnam $64.2 billion (+17.1%)|
|Germany $64 billion (+7.1%)|
|India $61.6 billion (+13.5%)|
|Netherlands $60.4 billion (+60.4%)|
|UK $52.1 billion (+2.2%)|
|Singapore $41.5 billion (-2.9%)|
|Russia $39.2 billion (+16.4%)|
However, the tariff talk, along with the recent U.S. corporate tax cut, are motivating major U.S. companies to get ahead of the game by bringing home some production. Apple, for example, announced it would make a “contribution” of $350 billion to the U.S. economy over the next five years, suggesting it would build new plants at home.
That could make a huge difference, by slowing the massive expansion of Chinese electronics exports driven by Apple and other tech companies, likely the biggest mass export of a category of product the world has ever seen.
Chinese electronics exports increased to $532.5 billion in the first 11 months of 2017, from under $50 billion over the same time period at the turn of the century. By comparison, the entire gross domestic product of Belgium, a rich European country of 11 million people, is around $500 billion a year.
Chinese electronics exports, first 11 months, every 3 years, 1996-2017
|1996: $17.9 billion|
|1999: $29.5 billion|
|2002: $58.7 billion|
|2005: $153.7 billion|
|2008: $317.6 billion|
|2011: $403.6 billion|
|2014: $511.5 billion|
|2017: $532.5 billion|
So if the U.S. stops buying so many Chinese-made products, who might fill in the void, and what might they buy? Chinese manufacturers, trade, and logistics firms have found a host of big, new markets, especially in large economies that still have room for growth, like Kazakhstan, Brazil and Nigeria.
China’s fastest-growing trade partners, over $10 bn, first 11 months of 2017
|Kazakhstan $10.5 billion (+43%)|
|Brazil $26.3 billion (+32%)|
|Nigeria $11 billion (+19%)|
|Poland $16.2 billion (+18%)|
|Vietnam $64.2 billion (+17%)|
|Russia $39.2 billion (+16.4%)|
|Netherlands $60.4 billion (+16.3%)|
|Canada $28.8 billion (+14.5%)|
|India $61.6 billion (+13.5%)|
|South Africa $13.5 billion (+12.6%)|
Chinese central economic planners have also managed to stimulate new areas of growth. Despite setbacks, such as the cancellation of a high-speed rail project in Indonesia, China, and companies like Sifang, has been building up its home infrastructure, and also exporting rail-related goods, doing deals in Turkey, Zambia and Vietnam, and selling billions in multi-modal containers. China has also ramped up oil exports, to $31.3 billion in the first 11 months of 2017, from $25.3 billion over the same time period in 2015, and found more room for growth in increasing sales of staples like toys, tea and clothes.
China’s fastest-growing export categories over $1bn, first 11 months of 2017
|Railway, tramway, containers $9.9 billion (+61%)|
|Fuel $31.3 billion (+32%)|
|Toys, games, sports gear $51.1 billion (+24%)|
|Base metals $2.9 billion (+23%)|
|Radioactive chemicals $13.5 billion (+18.1%)|
|Chemicals $14.5 billion (+16.3%)|
|Organic chemicals $44.2 billion (+15.4%)|
|Knitted, crocheted fabrics $15.1 billion (+14%)|
|Coffee, tea, spices $3.1 billion (+14%)|
|Furs, furskins $3.5 billion (+13%)|
Meanwhile, Chinese officials are doing their best to push back against U.S. and European complaints about its trade policy. The country is “complying with WTO rules,” said foreign ministry spokeswoman Hua Chunying. She accused the Trump administration of imperiling the current trading order by investigating Chinese trade practices with an eye toward imposing new import tariffs.
"We are a defender, builder and contributor of the multilateral trade system," Hua told reporters. It is the U.S., she said, which poses “an unprecedented challenge to the multilateral trade system. Many WTO members have expressed their concerns over that."
What topic would you like the Trade Numerologist to cover? Email firstname.lastname@example.org with comments and questions.
The Trade Numerologist is IHS Markit’s unique weekly look at global trade by award-winning journalist John W. Miller, formerly of the Wall Street Journal, using proprietary numbers from IHS Markit’s Global Trade Atlas database, the world’s most complete and accurate set of trade numbers.
- The Trade Numerologist: Africa’s Promise Relies on Inter-Continental Trade
- Crude Oil Trade: Russia seaborne exports, no rush in proceeding with OPEC cuts so far
- Crude Oil Trade: UK output to decline, loadings remain below 800k bpd
- Crude Oil Trade: Venezuela set to collapse, opportunity for Brazil and Mexico
- Crude Oil Trade: Libya's Sharara close to normal production by end of March
- Liquid Bulk Analysis: US loading more on VLCCs
- The Trade Numerologist: After Strong 2018, German Exports Threatened by Global Trade War
- Saudi Arabian Crude Oil Exports: Focusing on China, as flows to the US decline
The two major global factors which are expected to impact the container market are trade war implications and… https://t.co/S0vBhUYTRP