Trade Data Tells the True Story of China’s Massive Trading Network

The trade war between Washington and Beijing has cast a spotlight on China’s export juggernaut, a result of one of the most remarkable economic transformations in recorded history. 

Under the administration of President Trump, the US has imposed, or plans to impose, tariffs on nearly all Chinese imports into the country – worth USD 539.7 billion in 2018 and accounting for 21.6% of all US imports.

The protectionist argument underlying these duties is that Chinese imports have destroyed the US manufacturing base by flooding the country with low-cost imports. Keep Chinese goods out, the argument goes, and factories will once again be humming with activity from Pittsburgh to Peoria. 

The debate over trade carries high stakes for politicians, corporations and workers. Smart trade policy can create millions of new jobs and raise standards of living. At the same time, free trade comes with a cost, as uncompetitive factories shut their doors, a fact that workers in rural China and the US have painfully discovered. Getting it wrong would be a catastrophe. Runaway tariffs fostered the first Great Depression in the 1930s and could trigger a second one, say analysts.

Finding the right balance is tricky—and essential. As policymakers and political leaders sort out the best approach, it’s essential to keep a close eye on the data, which tells a story unvarnished by opinion. 

“The narrative that China has gotten rich just by exporting to the US is incomplete,” says Don Brasher, president of Trade Data Monitor. “China has built markets all over the world.” The breadth of Chinese exports is one of the biggest lessons to draw from the data. In 2018, 117 countries imported at least a billion dollars’ worth of Chinese exports, and 38 nations imported at least USD 10 billion worth of Chinese goods, according to TDM data.

The first essential fact to draw from the numbers is the unprecedented scale and size of the Chinese export machine. 

In 2000, China was the world’s sixth largest exporter of goods, shipping out USD 249.2 billion worth of goods, according to Trade Data Monitor (TDM), the world’s top source of trade data. By 2018, it led the world with almost USD 2.5 trillion worth of exports, a feat rivaling the economic empires of imperial Britain and the post-World War II US. Of those exports, roughly 19% went to the US, with Japan, South Korea, Vietnam, Germany and India rounding out the list of biggest importers of Chinese goods. 

Chinese Exports, Billions of Dollars; 3000 Billion, 2500 Billion, 2000 Billion, 1500 Billion, 1000 Billion, 500 Billion, 0 Billion; 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018
 
That trend is likely to continue as China pursues its Belt and Road Initiative by funding more ports, rail lines and roads, an initiative that includes over 65 countries, four billion people, and over USD 20 trillion in gross domestic product. 

Another key to understanding the numbers is to look back farther than China’s joining the World Trade Organization in 2001, which politicians and analysts often focus on. Outsiders often neglect to consider the long arc of a country that boasts the second oldest continuous civilization in human history, trailing only ancient Egypt. 

China started its current wave of economic modernization in the 1980s, a few years after the death of Mao Zedong in 1976, almost immediately triggering annual GDP growth rates over 10%, fueled initially by the rapid growth of the textile industry in Hebei, Hunan, Jiangsu and Shandong. 

By the 1990s, China had become an important player in global trade talks and was looking to make deals. It found a willing customer in Washington, where the government was lobbied intensively by corporations chasing higher profit margins. It was US business interests, like Walmart, Nike and Apple, who pushed for the passing of the Uruguay Round of trade talks, concluding in 1994, and for China’s accession to the WTO in 2001. These consumer goods companies, typically owned by US and European shareholders, pursued a strategy of making their wares in China and exporting them to markets all over the world.

In the years following China’s accession to the WTO, roughly half of all its exports came from foreign-controlled companies and they penetrated markets all over the world. In Japan, for example, Chinese imports increased to 20% in 2006 from 16.5% in 2001, according to TDM data. In Australia, they increased to 14% from 9%. In the US, imports rose to 16% from 10%. 

China Exports by Region, January-August, 2019; Source: Trade Data Monitor; Asia (not ASEAN), NAFTA, Europe, ASEAN, North Africa & Middle East, South America & Caribbean, Former Soviet Union, Sub-Saharan Africa, Australia & New Zealand

That growth has leveled off, but China’s rise is a reminder that, in a world with multiple economic superpowers, cooperation in global trade is more important than ever.

 
John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal. 
 
Trade Data Monitor (This email address is being protected from spambots. You need JavaScript enabled to view it.) is a Geneva and Charleston, SC based supplier of import and export statistics from 111 countries.

 

Chinese Fertilizer Exports Boosted by Population Boom

The world’s population has more than tripled since 1950, to almost eight billion. By 2050, it’s expected to reach 9.7 billion. All those people need to eat, and farms must keep fueling higher yields. That’s heated up global trade in the stuff that helps plants grow — fertilizers.
 
By improving soil nutrition, fertilizers boost yields of key crops like wheat, corn, sugar and soybeans.
 
This global USD 160 billion market is expanding at 4% a year and is especially robust in Asia, which accounts for roughly half of global demand. 
 
The fastest-growing fertilizer exporter is China, according to an analysis by Geneva-based Trade Data Monitor (TDM). In the first six months of 2019, Chinese fertilizer exports increased 31% year-on-year to USD 3.4 billion. China has now leapfrogged Canada and is second in the world in fertilizer exports, behind only gas-rich Russia. 

Top Fertilizer Exporters, January-June 2019; Russia $3880.14 million, China $3439.47 million, Canada $3229.61 million, EU 28 External Trade $2282.64 million, United States $2254.2 million; Source: Trade Data Monitor  
The biggest buyers of fertilizers are farming powers. The world’s top importers are the US, Brazil, India, China and Australia, according to TDM data. Brazil ramped up imports 32% in the first six months of 2019, to USD 4.8 billion. Its main sources were Russia, Canada, the US and China. Recently elected president Jair Bolsonaro has been loosening restrictions on deforestation to benefit massive fertilizer-hungry soybean and sugar cane farms.
 
A quick refresher on where fertilizers come from: They can be made of nitrogen derived from natural gas, or out of potash or phosphate rock mined out of the ground. Nitrogen fertilizers can also come from manure, garbage and sewage. In Jamaica, bat guano is even used to produce nitrogen-based plant food.
 
Big natural gas producers like the US, Russia, Belarus and Qatar have become top producers and exporters of fertilizers, as have mining powers like Canada, Indonesia, and China, which is the world’s top phosphate producer. In Canada, potash is mined thousands of feet below the earth’s surface, out of sediment left behind hundreds of millions of years ago by the evaporation of gigantic lakes. 
 
China’s top customers are India, Australia, Brazil, Indonesia and Vietnam. The world’s top importer is the US, but it buys mainly from Canada and Russia. 

Top Markets, Fertilizers From China, January-July 2019; India $839.42 million, Brazil $398.38 million, Australia $351.18 million, Indonesia $252.98 million, Vietnam $207.59 million, Japan $194.13 million, Thailand $185.98 million, Myanmar $178.14 million, Iran $157.21 million, South Korea $145.2 million; Source: Trade Data Monitor  
Fertilizers, a complex agricultural chemical product, are one of the ways that Chinese industrial companies have been developing higher-margin commodities, in the same way its economy has moved from making toys to computers.
 
Exporting higher-value products and diversifying exports are key goals of China’s Belt and Road Initiative, Beijing’s attempt to consolidate its trading power by funding more ports, rail lines and roads. Billed as a 21st century Silk Road, the initiative includes more than 65 countries, four billion people, and USD 20 trillion in gross domestic product. 
 
Not only is China a top producer of phosphate, it has also invested heavily in final commercial fertilizers, ready to sell to farms. These are made from a mix of nitrogen, phosphates and potassium, much of it imported as part of global supply chains. Farms then use high-tech machines to apply these fertilizers as solids, gasses or liquids. This is where Beijing has been carving out a niche. It’s now the world’s number one exporter of mineral or chemical fertilizers with two of the three fertilizer elements.
 
To be sure, the agricultural-industrial complex and the fertilizer firms that nourish it face challenges from environmental regulators, as well as food trends that are moving people toward healthier organic options. In addition, changes in diets mean that the world’s per capita demand for food is stagnating, according to the Rome-based Food and Agricultural Organization. And it’s a tough industry to consolidate, with thousands of producers around the world and relatively high shipping costs. 
 
Still, the quest to improve agricultural yields with plant nutrition is not going away. And it’s not just traditional crops for human consumption. The plant-based meat and ethanol fuel industries are also boosting demand for fertilizers.
 
John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal. 
 
Trade Data Monitor (This email address is being protected from spambots. You need JavaScript enabled to view it.) is a Geneva and Charleston, SC based supplier of import and export statistics from 111 countries.

 

A Booming Vietnam Must Balance US, EU and China

The US-China trade war is catalyzing investments in third countries where executives know they’ll be able to manufacture and export with fewer import tariffs on the goods they’re making.
 
One of the countries benefiting the most is Vietnam, whose economy is undergoing one of the most remarkable booms anywhere this century. After pushing itself through economic reform, the formerly war-torn nation of 97 million is in the midst of a manufacturing and trade boom reshaping its place in the global economy.
 
Companies are investing heavily in new manufacturing plants, and packing container ships with electronics, shoes and shirts headed for Los Angeles, Rotterdam and other ports in the US and Europe. In the first six months of 2019, Vietnamese exports to the U.S. increased 33% to USD 30.4 billion, while Chinese exports fell 12% to USD 219 billion, according to Trade Data Monitor (TDM). Vietnam is now the US’s 8th largest supplier of goods, up from 12th in 2017.
 
In June, Vietnam signed a new trade deal with the European Union, which Brussels called the “the most ambitious free trade deal ever concluded with a developing country”. The agreement will knock out 99% of tariffs between the two parties. The EU imported USD 45 billion worth of goods in 2018, up from USD 12.8 billion in 2010.
 
“It is likely that within 10 years, US imports from Vietnam will be higher than imports from Japan, the country’s 4th biggest supplier,” said Don Brasher, president of Trade Data Monitor.
 
Vietnam’s top exports to the US are electronics, apparel, footwear, and furniture. In some categories, it’s easy to see how new US tariffs are changing trade flows, with Vietnam replacing China as the main source of product. In electronics, for example, Vietnamese exports to the US increased 97% to USD 9.8 billion, while Chinese exports fell 16% to USD 57.8 billion, according to TDM data.

Major Countries’ Imports from Vietnam, 2016-2019*, Millions of US Dollars; United States, China, EU 28 External Trade, South Korea, Japan; 35,000, 30,000, 25,000, 20,000, 15,000, 10,000, 5,000, 0; 2016, 2017, 2018, 2019*; Source: Trade Data Monitor, LLC.; *2019: Annualized based on January-June 2019/2018 growth rate.
 
The creation of a strong export economy has helped Vietnam’s gross domestic product grow consistently at over 6% a year for the past two decades, while holding inflation and wages down and keeping its currency stable. And even better days may be ahead: two-thirds of Vietnam’s population is under 35.
 
To be sure, it’s not going to be all smooth sailing. Hanoi still imposes restrictions on foreign ownership and faces a risk of inflation from runaway growth. Its large informal economy is underregulated and undertaxed.
 
And with economic power comes tricky diplomacy. The challenge now for Vietnam is to balance its closer trading ties with Washington and its complicated relationship with China.
 
Vietnam is heavily dependent on imports from China. Chinese exports to Vietnam increased 14% to USD 44.6 billion in the first six months of 2019, suggesting a growing domestic market for Chinese consumer goods, more orders for parts to supply Vietnam-based manufacturers, and an increase in transshipment in order to avoid tariffs.
 
Another challenge Vietnam faces is deciding how much money to borrow from China for infrastructure under its so-called Belt and Road Initiative (BRI). The BRI, announced in 2013, is Beijing’s attempt to consolidate its trading power by funding infrastructure on a transregional scale. The initiative is billed as a 21st century Silk Road, including 68 countries, 4.4 billion people, and USD 21 trillion in gross domestic product. As the Chinese domestic economy cooled after decades of sizzle, Chinese leaders decided, the BRI would help foster new markets for Chinese firms, especially in construction, telecommunications and shipping, and help China outmuscle the US for influence.
 
Although Vietnamese leaders have endorsed the BRI in principle as part of closer economic ties with China, they’ve been slow to sign deals accepting Chinese funding.
 
“Given Vietnam’s cautiousness, the implementation of the BRI in Vietnam is likely to be slow,” warns Le Hong Hiep, a fellow at the International Institute for Asian Studies, in a recent paper. “However, due to rising public debt, Vietnam may refrain from applying for government-to-government loans. Instead, it may encourage domestic private investors to apply for BRI loans, especially from the Asian Infrastructure Investment Bank.” China, he concluded, “should acknowledge these challenges and work with its domestic stakeholders and Vietnamese partners to address them.”
 
Meanwhile, the new Vietnamese export machine keeps chugging along, buoyed by the new EU deal and President Trump’s visit in February. Vietnamese aviation firms said they would buy over USD 20 billion in parts, equipment, services from Boeing and General Electric.
 
John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal. 
 
Trade Data Monitor (This email address is being protected from spambots. You need JavaScript enabled to view it.) is a Geneva and Charleston, SC based supplier of import and export statistics from 111 countries.

 

Global imports

Blossoms in East Africa

Kenya and Ethiopia’s growing garment exports signal a new phase of development in East Africa and underscore how China-backed investments in infrastructure are helping to reshape economies.

For decades, Kenya and Ethiopia’s main shipments to rich markets in Europe and the U.S. have been niche agricultural products such as coffee, tea, sesame seeds, and fresh cut flowers. Those are still mainstays. Now manufactured goods, especially clothing, are also making their way on container ships to Rotterdam and Los Angeles.

Kenyan clothing exports increased 6% to USD 102.9 million in the first four months of 2019 compared to 2018, according to Trade Data Monitor. Almost 95% of those shipments went to the U.S. In Ethiopia, exports rose 79% in the first six months of 2019, to USD 71.9 million. Around 70% went to the U.S., followed by Germany, Italy and Canada. Big Western clothes-making corporations, including Puma, Gap, Wal-Mart, JC Penney and H&M are sourcing in the two countries. East Africa’s garment exports could be worth over USD 3 billion a year by 2025, say analysts.

The evolution is part of what trade experts say is a vital step in economic development. “The first export sector to take off is always garments”, says Don Brasher, president of Trade Data Monitor and a trade analyst since the 1980s. “That’s what happened in China in the 1980s, Bangladesh in the 1990s and Vietnam in this century. Now wages have risen in those places, making Africa more competitive”.

United States Imports of Apparel from Kenya and Ethiopia, 2015 - 2019*, Millions of US Dollars; Kenya, Ethiopia; 500.00, 450.00, 400.00, 350.00, 300.00, 250.00, 200.00, 150.00, 100.00, 50.00, 0.00; 2015, 2016, 2017, 2018, Projected 2019*; Source: Trade Data Monitor; *2019: Projected based on Jan - May 2019/2018 growth rate.

As companies set up shop, their network makes it easier for other companies to build plants. Apparel companies, for example, draw firms that make zippers, boxes, bags and belts. Wages rise, along with education levels, business confidence and investment in other areas of manufacturing. Other industries follow, such as shoes, watches, electronics.

One crucial asset for exporting manufactured goods is good transportation — ports, roads and rail lines. It’s more complicated and expensive to make and ship factory goods than agricultural products.

East Africa has benefited from Beijing’s attempt this decade to win influence on the continent by helping to fund projects, as part of its Belt and Road Initiative, aiming to cement China’s status as the world’s dominant trading power, by backing transport and infrastructure projects in 68 countries, home to 4.4 billion people and USD 21 trillion in GDP.

These ventures include new fibre-optic cables in Somalia and Ethiopia, and in Kenya a new rail line between the capital Nairobi and the port city of Mombasa. The Aviation Industry Corporation of China has opted to set up its African headquarters in Nairobi.

One part of the BRI strategy is consolidating a trading empire that revolves around Beijing and doesn’t depend on the US. America, however, is still the world’s top market for garments, and its consumers no longer have many domestic options: since the 1980s almost all US production has been offshored. Overall US garment imports in 2018 totalled USD 83.8 billion with the top suppliers all in Asia: China, Vietnam, Bangladesh, Indonesia and India.

To be sure, East African exports are small compared to Asia, and there are obstacles to further growth. In Kenya, real estate and power costs are relatively high. Ethiopia has cheap electricity thanks to hydroelectric dams, but is landlocked, increasing logistical costs. In both places, inefficiency and bureaucratic red tape are a brake on growth.

Trade deals have also helped increase exports. In 2015, the US extended the African Growth and Opportunity Act, a trade deal implemented in 2000, to 2025. Kenya and Ethiopia are two of the 40-some countries receiving preferential treatment for garments under the agreement. In Kenya, firms received a 10-year tax break to invest in Kenya’s so-called Export Processing Zones.


John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal. 

Trade Data Monitor (This email address is being protected from spambots. You need JavaScript enabled to view it.) is a Geneva and Charleston, SC based supplier of import and export statistics from 111 countries. 

Global Trade of electric cars

Electric Cars Remodel Global Auto Trade

The push of government subsidies and pull of consumer demand are driving new markets for electric vehicles, which run on electric batteries instead of carbon-based fuel, with widespread repercussions on shipping, trade and supply chains.

Electric vehicles, which include cars, trucks and bicycles, are still less than 10% of the global $2 trillion auto market, but that number is expected to increase by over 20% a year, helping to increase electricity’s share of total energy production to 24% by 2040 from 19% last year, according to the International Energy Agency. By 2030, they could account for as many as a third of all cars on the road.

Investment in clean energy, including electric vehicles, is a key part of China’s Belt and Road Initiative, which aims to solidify the country’s status as the world’s dominant trading power, by improving transport and infrastructure with 68 countries, including 4.4 billion people, and $21 trillion in gross domestic product.

In the first quarter of 2019, China was the world’s second biggest importer of electric vehicles, according to Trade Data Monitor. It shipped in $866.4 million worth, up 112% from the year before. Over 90% of that came from the U.S., thanks to Tesla’s dominant position in the market. Other top electric vehicle makers include China’s BAIC, BYD and Chery, Japan’s Nissan and South Korea’s Hyundai.

Although Beijing recently shifted some investment to hydrogen fuel cars, electric vehicles are still a major part of its strategy for reducing pollution by weaning itself from carbon-based transportation. This decade, China has spent billions of dollars installing charging stations around the country. The new industry is also sparking new markets for batteries and materials like lithium, cobalt and manganese needed to make them, which account for around a quarter of the cost of every electric car, and China is the world’s biggest exporter of lithium batteries.

The world’s number one market for electric cars is the European Union, thanks to its sheer size and environmental and tax policies that make gasoline expensive. Other top import markets for electric vehicles include Canada, Switzerland, South Korea, and Japan, TDM figures show.

The world’s top exporter of electric cars in the first quarter of 2019 was the U.S., with $2.16 billion worth shipped out. Its main destinations, in order, were Belgium, China, Canada, South Korea and the Netherlands. A big portion of the exports to the first and fifth countries were reexports to Norway.

The best place to study how this trend will evolve, and number one importer by country, is a nation of only 5.3 million. Norway, surprisingly, is drawing record shipments of Teslas and other models from the U.S., South Korea and transshipment ports like Antwerp and Rotterdam. It imported $3.8 billion in 2018 and $1.01 billion worth of electric vehicles in the first quarter of 2019, roughly doubling amounts the previous year, beating bigger economies like China, France, Canada and the U.S. Norway’s top sources of electric cars over that 15-month period were the U.S. ($1.24B) and Germany ($793.3M).

Despite its legendary and lucrative gas industry, Norway has exempted electric vehicles from its 25% Value Added Tax (VAT) and carbon dioxide, nitrogen oxide and weight taxes imposed on gas and diesel vehicles. They also get discounts on parking, toll roads and ferries. It’s working: Gas and diesel-powered cars are at record low, and registrations of electric vehicles have doubled since last year.

For policymakers, Norway is proof that consumers might only need a slight nudge to embrace electric vehicles and knock smoky sedans back into the 20th century. Unlike some other green power products whose only appeal is cost, electric cars, with their low noise levels and stylish designs, are considered a luxury product consumers are willing to pay for.

 

John W. Miller is an award-winning journalist and filmmaker who covered trade, mining and global economics as a foreign correspondent for the Wall Street Journal.