Pandemic, semiconductor shortages, energy crisis… none of these seem to have deterred China’s exports. China continues to make mark in world trade.
China’s trade surplus surged to a record high of USD 676.4 billion in 2021, the highest among all countries. Exports rose to USD 3.3 trillion marking an increase of 29.9 per cent over last year.
CHINA’s RELATIONS WITH US, EU AND INDIA
The US and China have still not straightened their trade talks. China still marked a surplus trade account of USD 396.6 billion, a 25.1 per cent jump over the previous year. China still faces a tariff hike for its products in the USA. The laws imposed during Trump’s presidency still continue under Biden’s government. China’s exports to the US stood at USD 576.1 billion, 27.5 per cent over 2020. China’s import of American goods also rose by 33 per cent to USD 179.5 billion.
China’s trade surplus with the European Union [EU] bloc swelled to 57.4 per cent to USD 204.8 billion in 2021 over a year earlier. Exports rose 32.6 per cent to USD 518.3 billion while import of European goods gained 19.8 per cent to USD 309.9 billion. This comes at a time when Europe and China are trying to become trusted trade partners while several problems related to humanitarian crisis, unfair trade policies and other issues continue to mar the progress.
India and China have been going through a bad patch with their international border issue but the bilateral trade between both the countries increased to USD 114.263 billion, 46.4 per cent higher than in 2020. Chinese exports to India stood at USD 87.905 billion, up by 49 per cent and China imported USD 26.358 billion worth from India, up by 38.5 per cent.
RECORD TRADE SURPLUS
According to an Associated Press Report, China’s global trade surplus, 26.4 per cent increase over 2020, is the highest ever reported by any economy. The report says that the only comparison as a percentage of the economy’s size likely was Saudi Arabia and other oil exporters during their price boom in the 1970s, but their total revenues were much smaller.
The increase in export was helped by China’s strict action to contain spread of the virus. These allowed businesses to return to normal around 2020 while the other world economies were grappling with containing the virus with restrictions. China expected to extend this advantage by containing the Omicron variant also; but cases have been reported within its borders forcing the re-introduction of restrictions. Julian Evans-Pritchard of Capital Economics predicts that the surge will weaken this month.
GLOBAL PUSH BACK
The US and Europe are aware of China’s growing power and her ambitious plans to expand trade through its Belt and Road Initiative. The BRI seeks to connect Asia with Africa and Europe via land and maritime networks. To promote BRI, China offers liberal loans for several infrastructure projects for the countries that keep the BRI. But these loans have proved to be debt traps. Many countries like Djibouti, Kyrgyzstan, Laos, Maldives, Mongolia, Montenegro, Pakistan, Sri Lanka, Tajikistan… have significantly worsened their macro-economic situation. Sri Lanka is a live example that has fallen into the debt trap and is struggling to service the huge debt. A working paper analysing the financing of 100 Chinese projects overseas highlighted that “cancellation, acceleration and stabilisation clauses in Chinese contracts potentially allow the lenders to influence debtors’ domestic and foreign policies.”
To counteract China’s economic and political aggrandisement, in June 2021, USA and other G7 partners agreed to launch a Build Back Better World (B3W) initiative which aims to mobilise bilateral, multilateral and private sector capital to help narrow the USD 40 trillion infrastructure gap in the developing world by 2035. This would focus on investments in climate and health security, digital technology, gender equity and equality.
The EU, in December 2021, too announced the Global Gateway, a plan to support infrastructure development around the world. This initiative aims to mobilise 300 billion Euro between 2021 and 2027 for connectivity projects notably in the digital, climate and energy, transport, health, education and research sectors.
While China leads investing in global projects and reaping advantages, the western world is trying to catch up and assert its leadership.
