Exports of innovative technology increase.
Although the trade situation has restructured, China is still the world's largest trading economy and the world's largest exporter. Even during the epidemic, exports of goods are still growing. From 2019 to 2021, the global share increased from 13% to 15%. % will remain at 14% in 2023, while developing countries’ share of China’s total exports of goods will increase from 42% in 2017 to more than 50% in 2023. The key is the transformation of this trade figure. At the same time, the Association of Southeast Asian Nations (ASEAN), composed of a number of developing countries, has become increasingly important as China's trading partner, with its share rising from 10% in 2010 to 15% in 2023.
The mix of China's trading partners has changed, and export products have become more diversified, reflecting the results of innovation over the years. The product mix has changed from labor-intensive to knowledge-intensive. Taking 2010 to 2022 as an example, China's organic chemicals exports The proportion increased by 9%, and the proportion of electronic products increased by 7%. The export of the popular automobile industry also increased by 6%. It is gradually turning to knowledge-based exports. According to figures, in the first two months of this year, China’s knowledge-intensive Exports of type services reached 276.65 billion yuan, an increase of 13.4%.
China's production changes the trade situation.
Although China still occupies an important position in global trade, as domestic sales of China's local products are active, more brands have strengthened domestic sales, making the overall trade intensity weaker. This is expected to be equivalent to China's total foreign trade in 2023. As can be seen from the 33% of GDP, the figure is much lower than the 64% peak in 2006. The current proportion of China's exports in GDP is lower than the global average, which is worth pondering.
China's value share in the global manufacturing industry has increased from 19% in 2010 to 34% in 2023, playing an important role in the supply chain. The American Chamber of Commerce in China's "2024 China Business Environment Survey Report" pointed out that 53% of affected companies The interviewer said that his company has a "in China, serving China" strategy. It can be seen that China is also improving its own industrial supply chain. Domestic procurement has become more advantageous for operators and there are more options for business operations. When formulating import and export strategies, it is also More flexible.
New trade distance under geopolitics
There have been many variables in global trade in recent years. To measure future development, we must not only look at geographical distance, but also consider geopolitical distance (trade distance where political opinions are inconsistent). For example, Mexico has become the largest trading partner of the United States, Vietnam's trade volume with China and the United States has soared at the same time, European economies have largely removed their energy dependence on Russia, and increased imports of electric vehicles from China. These are all examples of changes in geopolitical trade.
The McKinsey Global Institute found that the geographical distance of China's foreign trade is widening, but the geopolitical distance is narrowing. However, it is still an important participant in world trade and has diversified trading partners. It is worth the attention of business operators that one-fifth of the world's trade still occurs between economies that are geopolitically distant. Even if the political spectrum is opposite, the two continue to trade. However, under political pressure, major economies China is turning to cooperation with partners with more consistent political stances, and China can still stand out despite market changes. Compared with other economies, China still conducts more trade with partners that are geopolitically distant.
Technology trade is at risk.
Global trade is closely interconnected. It is not easy to break away from the links, and variables often arise. The trade in electronics and technology products is the first to bear the brunt. Taking notebook computers as an example, the United States has reduced its imports of these products from China and turned to Vietnam for procurement. Between 2017 and 2022, the United States’ imports of notebook computers from Vietnam doubled, reaching an increase of US$800 million. But in contrast, Vietnam's imports of laptop parts from China, such as circuit boards and touch screens, have also doubled, growing by about US$800 million.
Global trade reorganization is taking place, and there are still many variables, and more trade alliances may occur. Under the geopolitical situation, cooperating with trading partners who share the same position can improve diversification and business flexibility, and can also open up more trading partners. , but the uncertainties involved must be carefully considered. The important key lies in how China builds a flexible and sustainable trade network. If enterprises can grasp the key, they can break through in the new trade situation.
This article originally appeared in Hong Kong Economic Times.