While the global economic slowdown has had an inevitable impact on China’s overall trade, the competitiveness of China’s medium- and high-end manufacturing in the global markets gradually stands out as a new source of growth momentum for the country’s exports.
China’s total imports and exports grew 4.7 percent year-on-year to 16.77 trillion yuan ($2.36 trillion) in the first five months of this year, data from the General Administration of Customs showed on Wednesday. In dollar terms, total foreign trade amounted to $2.44 trillion during the same period, down 2.8 percent year-on-year. In May alone, China’s exports in dollar terms saw a 7.5 percent decrease year-on-year.
It is undeniable that China’s foreign trade is facing unprecedented challenges from the external environment. The world economic growth has taken hit from a variety of unfavorable short-term factors such as high inflation and high interest rates and deep-rooted structural challenges that are difficult to resolve, resulting in a slowdown in global demand for Chinese goods.
Meanwhile, the trade protectionism, unilateralism, and the US-led “decoupling” push targeting China have created more headwinds to Chinese exports, with Chinese orders declining in some sectors. Specifically, China’s exports to the US fell 15.1 percent year-on-year in the first five months of this year, which, to a certain extent, indicates the impact of China-US tensions on bilateral trade.
Yet, these negative factors may represent only one aspect of China’s foreign trade, which still has its own bright spot despite the weak global demand and external pressures. For instance, in the first five months of 2023, Chinese exports of mechanical and electrical products totaled 5.57 trillion yuan, an increase of 9.5 percent year-on-year, among which automobile exports surged 124.1 percent year-on-year. If anything, these bright spots are the key to China’s exports’ ability to make breakthroughs and overcome challenges.
Moreover, an increasingly obvious characteristic of China’s foreign trade is that the growth momentum in exports of medium- and high-end products is particularly strong.
For instance, electric vehicles contributed greatly to the rapid growth of China’s automobile exports this year. China’s vehicle exports in April reached 425,000 units, recording a year-on-year increase of 150 percent compared with the same period last year, according to data from China’s Association of Automobile Manufacturers. Total vehicle exports value stood at $8.31 billion, up 200 percent.
In addition, photovoltaic products have also been one of the bright spots for Chinese exports. Industrial data showed that in the first quarter of this year, Chinese exports of photovoltaic modules jumped 37 percent year-on-year, while exports of photovoltaic cells soared 66 percent year-on-year during the same period.
Indeed, these are the microcosm of the transformation and upgrading of China’s manufacturing sector. It is on the back of an economy wide upgrading that Chinese medium- and high-end products have not only become more competitive and innovative in the global markets, but also successfully expanded into diversified markets.
It is important to note that while moving up on the value chain, Chinese manufacturers still retain their traditional advantages in terms of reliable product quality and large-scale capacity. If anything, large-scale production creates a unique cost advantage for China that is especially valuable in a high-inflation market environment.
The EU is considering a mandatory ban on member states using companies that might pose a security risk in their 5G networks, including China’s Huawei Technologies Co, the Financial Times reported on Tuesday. It may control its member states, but it cannot control the global market, and Chinese companies won’t withdraw from global competition because of the potential EU ban. In the future, Huawei’s 5G products, with its strong cost and scale advantages, will become the competitors to those of EU producers.
The same advantages also could be applied to other Chinese manufacturers. This is also why the more inflationary pressure and other difficulties facing the world, the greater the advantage of China-made products could have in the global markets and the more opportunities they have to break the Western containment and obtain overseas market shares.
In this sense, despite the continued “decoupling” push by the US and its Western allies, China’s edges in manufacturing strength will still make it an irreplaceable part of the global supply chain.
(Global Times)
