The Australia-China Chamber of Commerce and Industry of New South Wales
ON RECENT DEVELOPMENTS
Update on Global Trade
7 December 2001
Since then, the World Trade Organisation (http://www.wto.org) released trade data for 2000. We decided that an update of the rankings would be informative.
More specifically, the relevance of the data concerned the following points:
China’s importance as a trading nation has been
increasing steadily and that trend is expected to continue for some time.
v Australia’s ranking as a trading nation improved during the 1990s, reaching the 13th position in 1999.
Both of these points can be
re-examined with the 2000 trade data.
We can also use the recent data to comment further on China’s
relatively high dependence on three major export markets: USA, the European
Union and Japan.
Table 1: Exports, Imports and Total Trade by Value (in US$ billions) and Global Share – 1999
Table 2: Exports, Imports and Total Trade by Value (in US$ billions) and Global Share – 2000
The developing countries generally increased their respective shares of total trade. China’s share, in particular, rose from 4.1 per cent to 4.6 per cent. China’s exports increased by 28 per cent during the 12-month period, and imports rose by 36 per cent. Both of these growth rates are well above the global average.
Australia fell by one ranking, due mainly to the sharp increase in exports by the Russian Federation (from US$74.3 billion in 1999 to US$105.2 billion in 2000). Australia’s exports increased by 14 per cent in 2000, which is above the global average of 12 per cent but well below the export growth rate of the Russian Federation (39 per cent).
In addition, Australia’s imports rose by only 3 per cent, which can be attributed to the lower value of the Australian dollar during the period. This helped the balance of payments on current account but lowered the weighted average growth in total trade.
In general, the trade data for
2000 are consistent with expectations.
The continuing growth in imports by the USA (19 per cent during the
period) boosted the growth rates for other economies, including China, but
China’s even greater increase in imports (36 per cent as noted above) also
contributed to the export performance of other nations.
This means that the sub-total in Table 3 of China’s exports to the United States, European Union and Japan may be too high and the amount of China’s exports to “others”, which included Hong Kong, may be too low. It is unlikely, however, that the difference amounts to much in percentage terms, and it should have relatively little effect on year-to-year differences.
Table 3: China’s Exports (in US$ billion) and Share of Total Exports
The data shown in Table 3 indicate that China’s dependence on the three major markets increased during 2000. The share of total exports destined for USA, EU and Japan increased from 80.3 per cent in 1999 to 88.1 per cent in 2000.
The amount of exports to other markets declined in 2000, producing a negative rate of change of 33 per cent. This underscores the importance to China of finding additional export markets and to reduce the existing dependence on the three shown in the table.
China’s imports are also becoming more dependent upon the three major suppliers (Table 4), though the degree of dependence is much less than exists for exports. More specifically, the share of China’s imports from USA, EU and Japan increased from 35.8 per cent in 1999 to 38.1 per cent in 2000.
Table 4: China’s Imports (in US$ billion) and Share of Total Imports
China’s dependence on the three major export markets is more concentrated in clothing and textiles, as well as in other consumer goods (Table 5). Approximate 50 per cent of China’s exports in these categories is destined for these markets.
Table 5: Share of China’s Total Exports Sent to USA, EU and Japan, by Major Item in 2000
The slower economic growth in
the USA, EU and Japan during 2001 has already resulted in a decline in
China’s exports to those markets, but the principal decline is expected to be
felt in office and telecom equipment, for which China’s dependency is
somewhat lower. The share is
nevertheless approaching 20 per cent and has been rising rapidly in recent
Table 6: China’s Share of Total Imports of USA, EU and Japan, by Major Item in 2000.
Not surprisingly, China has a much larger share of Japan’s imports of agricultural products, compared to the respective shares for USA and the EU. The share of Chinese electrical equipment in Japan’s imports in that merchandise category is also higher than the other two, but the difference is not as great.
In general, the closer distance
to Japan undoubtedly has an impact on China’s import shares, particularly in
the case of lower-value-per-unit items.
As a result of these changes, China’s surplus in merchandise trade narrowed to US$17.3 billion, compared to US$24.1 billion for the 12 months of 2000. Unless there is a substantial pick-up during the remainder of 2001, the decline in net exports will slow China’s economic growth rate.
China’s domestic demand has
nevertheless remained buoyant during the year, so it is unlikely that a
substantially lower rate of economic growth will result for 2001. A continuing decline in exports during
2002, however, without a significant increase in government spending, will
have an effect on economic growth next year.