China’s trade sector shows resilience and vitality
China’s total trade volume in the first seven months of 2024 reached US$3.5 trillion, a year-on-year increase of 3.5 percent, reported the General Administration of Customs. Exports increased by 4 percent and imports increased by 2.8 percent. Compared to 2023, when total trade shrank by 5 percent for the whole year, the first seven months of 2024 have seen a rebound in foreign trade, significantly better than anticipated.
In the past few years, global trade has faced many adverse factors, including weak growth in major economies, the impact of the Covid-19 pandemic, intensifying geopolitical conflicts and rising trade protectionism, all of which have increased trade costs, deteriorated the trade environment and caused an economic slowdown. China’s trade performance in 2024 demonstrates significant resilience and vitality.
China’s trade performance is better than the global average. According to the World Trade Organization (WTO), global merchandise trade value increased by 1.4 percent in the first quarter of 2024 compared to the same period in 2023. The WTO expects the global goods trade to grow by 2.6 percent for the whole year. By comparison, China’s 3.5 percent trade growth rate in the first seven months has posted a much stronger recovery, indicating that foreign trade has moved past its post-pandemic difficulties.
The country’s trade structure has also continued to optimize. In the first seven months, China’s electromechanical product exports accounted for 59 percent of all exports, a year-onyear increase of 8.3 percent. In addition, general trade for end users accounted for 64.7 percent, and processing trade made up only 17.4 percent.
Processing trade was the primary type of trade in China’s foreign trade, accounting for over one-half of China’s total foreign trade in the late 1990s. The result was that despite high trade volume, there was limited domestic value added in related trade activities. In the past years, China has made significant progress in the production and R&D of intermediate goods, greatly reducing dependence on imported components. The shrinking portion of processing trade indicates a significant increase in the intrinsic driving force of China’s foreign trade.
In the meantime, China has become a major exporter of intermediate goods. For example, exports of automatic data processing equipment and parts, and integrated circuits jumped by 11.6 percent and 25.8 percent in the first seven months.
In the meantime, China’s auto exports have surpassed South Korea, Germany and Japan, the former No.1, to become the world’s largest exporter. In the first seven months, auto exports totaled 462.86 billion yuan (US$65B), up by 20.7 percent.
There have been great efforts to diversify China’s trade partners. Developed countries long dominated China’s foreign trade map. However, as developing countries’ share in the global economy grows, their status as China’s trade partners is rising.
As China upgrades its industries, the trade relationship with developing countries has become more complimentary, while relations with developed countries have become more competitive. As many developing countries are still in the early stages of industrialization, there will be long-term robust demand for Chinese products and technologies.
In sum, China’s foreign trade performance in the first seven months is encouraging. Recognizing the structural and long-term forces behind the robust trade data, China should have confidence in long-term foreign trade development. As long as the country persists in innovation-driven and high-quality development, focuses on building new productive forces, and continuously enhances industrial technological strength, it can overcome current short-term constraints, maintain healthy foreign trade growth, and contribute to the development of both China’s and the global economy.