China grabs greater share of global goods trade during pandemic but UK drops out of top 10

Wed 4 Aug 2021
Posted by: William Barns-Graham
Trade News

china trade

China’s global market share has grown to 18% during the pandemic, despite escalating trade tensions with the US, according to new research.

A study by Oxford Economics, reported in the Daily Maverick, shows that China’s most significant trade gains have occurred in developed markets as rather than emerging markets.

This is despite Donald Trump’s 2018 trade war with the country and attempts to “decouple” the US and Chinese economies, with a greater emphasis on the US reshoring its supply chains.

US allies including the UK have also become more hawkish about ties with China.

Sticky supply chains

According to the report: “China’s strong export performance since the outbreak of the Covid-19 pandemic underscores that the global supply chains developed in recent decades — and in which China plays a key role — are much ‘stickier’ than many suspected.” 

Bloomberg reports that Chinese exports climbed 30.6% in dollar terms in March 2021.

Surge

This picture of Chinese dominance is relatively recent, according to UNCTAD data.

Going back to 1978, China had only 0.8% of global goods exports, compared with 5.2% for the UK and 11.8% for leading nation Germany.

As recently as 2000 China still only commanded 3.9%, still behind the UK’s 4.4% and the US’s 12.1%.

However, the past two decades have seen a shake up in the goods exports league table, including the rise of China “from the periphery of global trade to the export powerhouse of the world,” UNCTAD have said.

UK drop

Other winners over this period include Mexico, which has gradually climbed to become the 11th largest exporter of the world, propelled by in part by the North American Free Trade Agreement (NAFTA) and then the United States-Mexico-Canada Agreement (USMCA).

The UK, meanwhile, has dropped out of the top 10, though it remains one of the leading exporters of services in the world. Its traditional competitors in goods trade, such as the US and Germany, remain towards the top.

Pandemic

Overall global trade fell by 7% in 2020 due to the pandemic, but countries have been disproportionately affected, according to a column by economists at VoxEU.

However, UNCTAD reported that Q1 2021 saw global trade at higher levels than before the pandemic, up by 10% year-on-year – a faster bounce back than following other recent downturns.

“Global trade has recorded a faster recovery from the recession caused by the pandemic than in the last two trade recessions,” said UNCTAD economist Alessandro Nicita.

Tech exports

A new report also seems to show that China is increasing its level of technology exports, despite moves by the US to shut down Chinese advancement in the sector.

The SMCP reports a study by Harvard University Growth Lab that shows China ranked 16th globally in 2019 on the complexity of its exports.

2020 goods exports league table

  1. China – 14.7%
  2. USA – 8.1%
  3. Germany – 7.8%
  4. Netherlands – 3.8%
  5. Japan – 3.6%
  6. Hong Kong – 3.1%
  7. Korea, Rep – 2.9%
  8. Italy – 2.8%
  9. France – 2.8%
  10. Belgium – 2.4%
  11. Mexico – 2.4%
  12. UK – 2.3%

(Source: UNCTAD)