In 2013 China overtook the United States as the world’s top trading nation, reporting record trade figures in December. China is also expected to be the largest oil importer this year.
While the US is still the world’s largest economy, China is now the number one trading nation, as business grows rapidly with Asian and Middle East countries, representing a shift of power away from North America.
China’s international trade volume – its total value of exports and imports – increased by 7.6% in 2013 compared to 2012, reaching $4.16 trillion, according to Chinese official data released earlier this week.
US international trade volume reached $3.57 trillion in eleven months of 2013 (excluding December). Full year US figures will be published in February. Economist are certain that China is now the world’s biggest trading nation (in goods).
Top trading nation “A landmark milestone”
Zheng Yuesheng, head of statistics at the General Administration of Customs in China, said “This is a landmark milestone for our nation’s foreign trade development.”
According to Zheng, 2014 should bode well for China, because:
- the global economy is recovering,
- China will start to see the benefits of its latest structural reforms, and
- commodity prices will probably decline, which will help reduce the effects of rising wages.
However, overseas investment in the Chinese manufacturing sector has fallen, and fewer parts are being sent to the country to be assembled and then shipped abroad.
Assembling parts brought in from abroad and then re-exporting the finished product represents approximately on third of China’s trade.
Zheng said “We all know that one characteristic of the processing trade is to first import then export, so lower growth in processing imports shows that in the near future, the outlook for processing exports is not too optimistic.”
Over the last thirty years Chinese international trade has doubled every four years. In 2009, China became the largest exporter in the world, which today accounts for over 10% of the global goods trade compared to 3% fourteen years ago.
December export growth lower than expected
Chinese exports grew by 4.3% in December 2013 compared to December 2014. Authorities say this slower growth was mainly the result of a clampdown on speculative activities disguised as export transactions. Imports rose by 8.3% over the same period.
Reuters news agency quotes Dariusz Kowalczyk, a senior economist and strategist for Credit Agricole CIB in Hong Kong, who said:
“Exports weakened dramatically, but were close to the consensus. The data is positive for China and Asia sentiment as it alleviates concerns that China is slowing too sharply.”
December’s trade surplus at $25.6 billion was lower than the $31.2 billion most economists had been predicting.
Most experts were surprised at December’s increase in imports, which shows that domestic demand is growing strongly.
Chinese authorities would like to see the country move away from such a heavy reliance on exports and investments, and towards more sustainable growth in consumption. The Communist Party has announced a series of bold economic and social reforms aimed at moving the country’s economy in that direction.
Some historians say that this is not the first time that China is the world’s largest trading country. They believe that at various points during the Qing dynasty (1644-1912) China had been in the lead.