Trends in Chinese Trade with the World

4.1 Trends in Chinese Trade with the World

In the resurgence of the Chinese economy in the recent decade, the external sector played an important role, though it passed through a phase of volatility due to the periodic swing of global business cycle. Between 1998 and 2012, Chinese trade with the world economy registered an eleven-fold increase, surpassing the performances of other fast growing countries of the world. The country’s total export was US$ 184 billion 1998 and increased to US$ 2.05 trillion in 2012 (see Table 4.1). Similarly, imports increased from US$140 billion to US$1.8 trillion dollar between 1998 and 2012, showing a more than thirteen-fold increase during the decade. It is important to note that imports increased more rapidly than exports.

Table 4.1: China's Trade with the World Economy

(US$ Million)

Trade

Sur/Exp Trade Surplus Actual

Average for the period

Source: Direction of Trade Statistics, Online accessed on October 27, 2013, IMF, Washington DC. Note: Sur/Exp denotes share of trade surplus to exports and Growth denotes compounded annual growth rate (CAGR).

The global business cycle has had a profound impact on the performance of the Chinese external sector. During the slump period of 2001-2003, the average growth

rate of the trade sector was 22.1 per cent per annum on an average, and revived during 2004-07 with an average annual growth rate of 26.5 per cent with global recovery. In the recent episode of ‘global financial recession’ (2007-2009), the average annual growth rate remained positive, but remained lowest in recent years owing to the negative external sector growth recorded in 2009. Despite the Euro Zone Crisis’, Chinese external sector resumed with high growth in 2012. During 2010-12, Chinese overall trade expanded at the CAGR of 14.1 per cent, where imports grew faster than its exports. The experience shows that the revival of the Chinese trade sector in the subdued global economy has been very swift in recent years.

One of the important features of the Chinese export sector has been its persistent creation of trade surplus over a period of time despite global recession. The size of trade surplus from merchandise trade was growing at the CAGR of 101.4 per cent during 2004-07. The growth trajectory of trade surplus was so stiff that a negative growth rate was recorded in 2009 after 5 years of persistently positive growth performance. Although the recession continued the world economy until 2009 in the first phase of global recession, China generated a trade surplus of US$ 200 billion, covering 16.6 per cent of its exports. This process continued even during the ‘double-dip’ recession where it registered a trade surplus of US$235 billion in 2012 and grew at the CAGR of 12.1 per cent during the period 2010-12.

China has impressively integrated itself with the world economy, particularly after its accession to the WTO in 2001. During 1998-2009, the world trade grew by

2.3 times, but trade by China grew three times more than that of the global trade. Sparks of such growth performances were felt in both exports and imports of the country. China has gradually improved its global share in exports and imports since the post Asian Financial crisis. In 1998, the country’s share in the global exports and imports were 3.4 per cent and 2.5 per cent respectively, but these shares increased to 9.7 per cent and 7.8 per cent respectively, in 2009. Interestingly, Chinese share in the global trade improved significantly during the period of recession. The global trade increased by 40 per cent during the period 2010-12, but Chinese trade with the world grew faster than the world trade. Chinese exports and imports share with the world were 9.0 and 8.2 per cent respectively during the same period. Chinese exports have been dependent on its imports and opportunities in the import sector have to be explored strategically to have a wider market access in China.