Column : Importing to export

Feb 21 2013, 01:57 IST
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SummaryChina’s status as the world’s largest goods exporter has much to do with its imports from Taiwan, South Korea and Japan.

China’s emphatic dominance of world trade hides some interesting aspects of its economic relationship with different regions.

China’s total merchandise trade was around $3.6 trillion in 2011. This comprised exports worth $1.9 trillion and imports worth $1.7 trillion. This left China with an annual trade surplus of around $200 billion. This is, of course, expected given its 10.4% share in world goods exports and 9.4% share in world imports. In services, China has a trade deficit of around $50 billion.

China’s high share in world exports, which makes it the world’s top-most goods exporter, coupled with its sizeable goods trade surplus, gives the impression that it runs trade surpluses all across the world. However, it is not so. Indeed, China’s position as the world’s top goods exporter has much to do with the unique trade relations it has with some regions and the trade deficits it runs with them.

China runs a trade deficit with Africa. This is surprising to many given that the common notion is that poor Africa laps up all Chinese goods and has hardly anything to offer in exchange to the prosperous Middle Kingdom. On the contrary, China had a deficit trade of around $20 billion with Africa in 2011, which was a sharp increase over $7 billion the year before. The largest deficits in Africa are with Angola, South Africa, Congo, Libya, Sudan and Zambia. While most of these deficits are produced by China’s insatiable appetite for crude oil, they are also influenced by large purchases of raw material like wood and minerals like copper and nickel.

China’s largest trade deficit is with the Asian continent. This is hard to believe for Indians given that India runs a large trade deficit with China. But the truth is that China ran a deficit of more than $100 billion with Asia in 2011. The individual deficits are scattered over West, Southeast, Northeast and Central Asia. The only part of Asia where China has trade surpluses with all countries is South Asia. It has large deficits with Iran and Saudi Arabia and runs relatively small deficit trades with Oman and Qatar. Kazakhstan and Turkmenistan are the two Central Asian republics running trade surpluses with China. Again, it is primarily oil and hydrocarbons that influence these trade deficits, like they do in China’s trade with Africa. Coal and minerals are also responsible for China’s large trade deficit with Australia and the overall deficit

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