Sina
Edition: CHINA ASIA USA EUROPE AFRICA
Home > Business
Friday, April 22, 2016, 12:09

China share in global exports biggest in 50 yrs

By Reuters

China share in global exports biggest in 50 yrs
In this Feb 15, 2016, file photo, a port worker stands near a container ship at a port in Qingdao in eastern China's Shandong province. (Chinatopix via AP, File)

SHANGHAI - Chinese exporters have found a silver lining in weak global demand by seizing market share from their competitors.

China's proportion of global exports rose to 13.8 percent last year from 12.3 percent in 2014, data from the United Nations Conference on Trade and Employment shows, the highest share any country has enjoyed since the United States in 1968.

The success belies widespread predictions rising costs for Chinese labour and a currency that has increased nearly 20 percent against the dollar in the last decade would cause China to lose market share to cheaper competitors.

Instead, China's manufacturing infrastructure built during the country's industrial rise of recent decades is keeping exports humming and providing the basis for firms to produce higher-value products.

"China cannot be replaced," said Fredrik Guitman, formerly China general manager for a Danish maker of silver products, adding that reliable delivery times were more important than price. "If they say 45 days, it will be 45 days."

Still, even as Chinese firms compete in more sophisticated product lines, they are unloading overstocked inventory from entrenched industrial overcapacity in sectors like steel, an irritant in global trading relationships. The United States and seven other countries this week called for urgent action to address a steel supply glut that many blame on China.

At the same time, China's imports from other countries fell sharply - down over 14 percent in 2015 - leading some economists to suggest China was deploying an "import substitution" strategy that is pushing foreign brands out of its domestic markets.

On Wednesday, Beijing rolled out fresh measures to support machinery exports, including tax rebates, and encouraged banks to lend more to exporters. Machinery and mechanical appliances make up the biggest portion of China's exports.

Such policies may not be welcomed in the United States, where Republican presidential hopeful Donald Trump has called for 45 percent tariffs on Chinese imports.

The risk is that the Chinese firms successfully moving up the value chain will see their overseas profits destroyed by a trade war if Trump's ideas find place in policy.

ADVANTAGE

China share in global exports biggest in 50 yrs
Chinese firms' tenacity in overseas markets is largely built on the country's investment in a massive and integrated supply chain infrastructure, which makes them faster and more reliable to foreign companies that outsource all or some of their production.

"Reliability and speed is more important than price," Guitman said. "An out-of-stock product will hurt much more than a slightly higher price."

This manufacturing playground is allowing companies that make their own original goods to tinker with their products and branch out.

"China's export structure may not be as sophisticated as that of high-income economies, but with a better educated labour force and increasing investment in innovation, the country's products are now generally of a higher unit value and require more skilled labour," HSBC economists said in a report.

Critics say much of China's move up the value chain has been the result of pressure on foreign firms to transfer technology combined with a systematic and sustained campaign of industrial espionage targeting foreign technology.

The legions of mid-sized Chinese companies that now make drones, high-tech labels, smart home devices, and wind power equipment may lack the cachet of Chinese social media firms like Tencent, but they are a far greater combined threat to complacent foreign competitors, analysts say.

Latest News