China Leads Global Trade in Lithium-Ion Batteries

The age of the lithium-ion battery has arrived, and it’s Asia, especially China, that is dominating burgeoning global trade.

In the first 10 months of 2020, China exported $12.5 billion of lithium-ion batteries, followed by South Korea ($4 billion), Poland ($3.2 billion), and Germany ($2.7 billion), according to Trade Data Monitor. As a recent story in the Wall Street Journal points out, that’s more control over the market that anything in the crude oil industry, where even the world’s top producers – the U.S., Saudi Arabia and Russia – all generate less than 20% of global production.

Only invented in the second half of the 20th century and later pioneered for mass production in laptops and camcorders, lithium-ion batteries are the linchpin of a booming new trade in electric vehicles.

Governments around the world, concerned about climate change caused by carbon emissions, are pushing massive private investment in electric-powered cars. The new administration of President Joe Biden has promised policies that encourage Americans to buy electric vehicles. Beijing has ordered that 40% of cars in China be electric by 2030. General Motors, the giant U.S. automaker, has pledged to invent dozens of new electric vehicles, and only make EVs by 2035. It wants to catch up to companies like Tesla, the U.S.-based global leader, and Germany’s Volkswagen. Although EVs make up less than 5% of all cars on the road, it’s clear that Tesla Model S, Chevy Volt, and Toyota Prius Prime are the future of the industry.

The biggest import market for electric vehicles is Europe, where use is encouraged by high gasoline taxes and incentives. The world’s top electric car importers are the Netherlands ($3.6 billion), Germany ($3.1 billion), Belgium ($2.8 billion), the UK ($2.3 billion), and Norway ($2.3 billion). (That’s why the latter, the smallest on the list by population, was the subject of General Motors’ Super Bowl ad starring Will Ferrell.) However, the biggest overall market, including imports and domestic production, is China, where Volkswagen, BMW, Toyota, Honda and other world-class carmakers have all built plants to make electric vehicles.

China has been ramping up its battery capacity, thanks in large part to Contemporary Amperex Technology Ltd, or CATL. Rivals include Japan’s Panasonic, and South Korea’s Samsung SDI and LG Chem. Tesla manufactures batteries at a plant in the Nevada desert it operates with Panasonic.

China’s top customers for lithium-ion batteries were the U.S. ($2 billion), Hong Kong ($1.5 billion), Germany ($1.2 billion), and South Korea ($1.1 billion). And the world’s top exporters of electric cars are Germany ($6.2 billion in the first 10 months of 2020), the U.S. ($4.9 billion), Belgium, ($4.8 billion), and South Korea ($3.2 billion).

To be sure, it’s not just cars and trucks. Power plants are also using battery technology. They’re used to store excess power and then redistribute it when there are spikes in demand. The technology is elementary: Lithium ions are transferred via a liquid from cathode to anode and back to cathode. But recent innovations have brought down production costs closer to those of petroleum-powered engines. The price different between an electric engine and fossil-fuel engine is expected to decline to zero in the next five years, and by 2030, as many as one-third of cars on the roads are expected to be electric.

The strong demand has greased a supply chain of battery ingredients, including lithium, cobalt and manganese. In order for mass production of electric vehicles to be commercially viable, raw material supplies have to remain constant and affordable. Australia, Chile and China are the world’s top producers of lithium. A bigger problem is cobalt, in which the Democratic Republic of Congo, a war-torn country, dominates production and trade.

The $20.9 Billion Covid-19 Vaccine Economy

New Covid-19 vaccines have funded new research, fueled sprawling supply chains, and boosted demand for yeasts and other key ingredients, according to an analysis by Trade Data Monitor, the world’s top source of trade statistics.

Total shipments of “immunological products” are expected to increase 18.5% to $134 billion in 2020 from $113.1 billion in 2019, a $20.9 billion increase, according to TDM. That’s close to an estimate by the Gates Foundation in April 2020 that making and distributing the vaccine would cost up to $25 billion.

That’s a small price to pay for the damage that Covid-19 could cause unchecked. It’s been a year since the pandemic started sweeping the globe, infecting almost 100 million, killing two million, and destroying trillions in economic value. Global trade is expected to fall around 10% in 2020, according to the World Trade Organization.

Almost immediately, governments and companies sped up their usual vaccine development clock, usually at least four years. By mid-December, over 50 vaccines were in production, stimulated by billions of dollars in government investment. Six vaccines have now been approved by regulators.

The world’s pharmaceutical industry which led the charge is still headquartered in Europe, although Asia is catching up. The world’s top exporter of immunological products was Switzerland. Its exports of immunological products increased 13.4% to $28.6 billion in the first 10 months of 2020. Germany finished second, with exports up 7.8% to $18.51 billion, followed by Ireland, with exports up 16.9% to $18.5 billion.

China, epicenter of the pandemic, ranked tenth in exports, but registered by far the most dramatic increase of any major exporter. Its exports of immunological products leapt 1,185% to $2.3 billion in the first 11 months of 2020, up from $176.6 million over the same period in 2019. Its biggest markets were the UK ($366M), U.S. ($326.1M), and Germany ($230.6M).

Overall, China’s pharmaceutical industry boosted exports 34.1% to $11.2 billion over the first 11 months. Shipments to the U.S. rose 32.4% to $2.2 billion. There’s still plenty of room for growth. So far, authorities have okayed six vaccines so far for use by the public: two so-called RNA vaccines by Moderna and Pfizer-BioNtech; two conventional vaccines by Sinopharm and Sinovac; and two viral vaccines by the Gamaleva Research Institute and a joint venture between Oxford and AstraZeneca.)

Pfizer, Moderna, and AstraZeneca are expected to make over five billion doses in 2021, enough to vaccinate three billion people, according to analysts.

The U.S. was by far the biggest buyer of immunological products in 2020, importing $23.5 billion in the first 10 months, up 33.5% from the same period the previous year. The U.S. was followed by Germany, Belgium, Japan, and China. The latter imported $6.2 billion in the first 11 months, up 6.5% from the same period in 2019.

The list of ingredients needed to make and administer vaccines is long, including syringes, vials, and synthetic rubbers such as latex, and large-scale doses of chemical components such as yeasts, proteins, and gelatin.

Here China’s vast manufacturing centers played a more important role than in the production of the final product.

China was the world’s number one exporter of yeasts, ramping up shipments 12.3% year-on-year to $309.8 million in the first 11 months of 2020. China was the world’s third-ranked exporter of gelatin, shipping out $175.6 million in the first 11 months of 2020, up 28% year-on-year.

And it was the top exporter of syringes, at 14.2 billion units over the first 11 months of 2020, up 6.7% from the same period in 2019. They were sold at a discount: By value, exports fell 8.4% to $693.2 million.

Global Trade in 2020 Rebounded After Spring Slump

China’s full-year numbers show how global trade was almost crippled by the Covid-19 pandemic during the first quarter of 2020, but recovered in large part thanks to Chinese exports, according to an analysis by Trade Data Monitor, the world’s top source of trade statistics.

In the first quarter of 2020, as China’s economy contracted 6.8%, exports fell 13.4% year-on-year to $477.9 billion. By comparison, U.S. exports declined only 3% in the first quarter, to $395.7 billion.

By the end of the year, however, China’s exports had risen 3.6% to a record $2.6 trillion while U.S. exports declined 13.9% to $1.3 trillion in the first 11 months of the year. For the year, China clocked a trade surplus of $535 billion, its highest figure since 2016.

China successfully contained the Covid-19 virus effectively and got its factories and ports running again. Thanks in large part to this strong performance, global trade is now expected to decline around 10%, compared to the 20% decline that was expected in the spring.

In 2020, “China was the only one major economy in the world that has reached a positive growth in goods trade, the status of [China as] the largest goods trading nation [in the world] has been further consolidated,” said China customs spokesman Li Kuiwen, according to the South China Morning Post. For the year, China’s economy is now expected to grow around 2%, making it the only rich economy to record positive economic growth in 2020.

In December, for the seventh straight month, China registered strong trade growth. Exports increased 18.1% year-on-year to $281.9 billion. China’s trade surplus with the rest of the world increased to $78.2 billion in December, its highest ever, beating its previous record of $75.4 billion in November.

In 2020, China’s biggest market was again the U.S. Exports rose 7.9% to $451.8 billion while imports increased 9.8% to $134.9 billion, increasing the trade surplus with the U.S. to $316.9 billion. Shipments to the European Union increased 6.7% to $391 billion, while imports rose 2.3% to $258.6 billion. Exports to Latin America, India and Japan, however, all declined.

As China faced tariff barriers in the U.S. and higher wage costs, supply chains have moved elsewhere in Asia. Exports to Vietnam rose 16.3% to $113.8 billion.

Thanks to its prowess in manufacturing and Western consumers’ shifting of work to home from office, China ramped up exports of computers, phone, routers and data storage units. Exports of high-tech goods increased 6.3% to $776.7 billion. However, exports of products people use to move around all declined dramatically. Exports of bags and containers fell 24.2% to $20.6 billion, garments dropped 6.4% to $137.4 billion, and footwear shipments fell 21.2% to $35.4 billion.

In the U.S. and Europe, hospitals, pharmaceutical companies and public health officials are buying medical equipment they need, such as ventilators, face masks, and now many key ingredients for mass-produced vaccines, from China. Exports of medical devices increased 40.5% to $18.1 billion.

China’s importance as an import market continued to grow. It ramped up imports of meat 59.6% to $30.7 billion, partly because of swine flu and other domestic supply problems. It increased imports of cosmetics 29.4% to $20.2 billion, a reflection of its booming middle class. Imports of petroleum, coal and natural gas all fell by double-digits as commodity prices declined, industrial activity slowed, and people drove less because of the pandemic.

It’s unclear how long China can sustain this robust growth in exports. As countries roll out vaccines, they are bound to slow import of medical supplies. Markets for laptops and other electronics will saturate. But as the world seeks to recover from the devastation of the Covid-19 pandemic, trade data suggests it’s more dependent than ever on the Chinese export engine.

Vietnam Survives Covid-19 Crisis Thanks to Exports

As countries around the world launch Covid-19 vaccination programs, Vietnam is emerging from the pandemic as one of the global economy’s strongest survivors.

The gross domestic product of the Asian nation of 96 million people rose 2.9% last year, making it one of the only economies in the world, along with China, to record positive growth in 2020.

Vietnam’s remarkable success has been due to an efficient lockdown program that limited deaths to under 50, compared with around two million worldwide, and a robust economy propelled by one of the world’s most successful export programs, according to an analysis by Trade Data Monitor.

The 2020 gross domestic product, although lower than in 2019, followed two straight years of economic growth over 7%, Vietnam’s General Statistics Office said last month. “However, amid the negative impacts of the COVID-19 pandemic, it is considered a success for Vietnam, with the growth rate among the world’s highest,” the GSO said.

Vietnam’s rise to prosperity after recovering from the ravages of war has followed a familiar script. Like China a generation ago, it’s invited manufacturing and export zones up and down its long coast, stimulating construction and investment, starting with garments and footwear and now evolving into cars and electronics. It’s also modernized its ports, roads and rail systems.

The strategy has worked. Overall, countries’ imports from Vietnam increased to $242.4 billion in the first nine months of 2020, up from $206.6 billion over the same time period in 2018, a 17.3% increase.

It’s a big payoff for international investors, who’ve intensified their focus on the country. Between 2010 and 2019, Vietnam attracted $143 billion in foreign direct investment, according to the U.S. State Department. Of that, 59% went into manufacturing, much of it designed for exports to rich Western markets.

U.S. imports from Vietnam have increased to $64.8 billion in the first 10 months of 2020, up from $12.3 billion in 2010. U.S.’s trade deficit has increased to $56.6 billion in 2020 from $9.4 billion in 2010.

Top Importers from Vietnam; United States, China, Japan, South Korea, Germany, India; 80 70 60 50 40 30 20 10 0 Billions of USD; 2010-2020* *annualized; Source: Trade Data Monitor LLC, January 7, 2021

That trade deficit is a big reason that in December the U.S. slapped a label of currency manipulator on Vietnam, which will make it easier for companies and their lawyers to request tariffs from the U.S. federal government. “Vietnam is the new China production platform, so that’s going to attract attention,” says a lawyer for a top trade firm. Still, tariffs are minimal for now, and it will be a long time, if ever, before Vietnam catches up with China.

Vietnam is part of a trend. As China has faced more tariffs from the U.S. and Europe, and experienced higher wages, companies have outsourced their factories across Asia, to countries including Malaysia, Thailand, Singapore, and the Republic of Korea.

But Vietnam has become such a key part of China’s supply chain that it is now the world’s fifth biggest market for Chinese exports. In the first 11 months, 2020, China shipped $101.1 billion of goods to Vietnam, up 15.1% from the same period in 2019. Over a third of that was electronics, which made up $36.4 billion, up 32.6% from the same period in 2019.

Top Exporters to Vietnam; China, South Korea, Japan, Singapore, Thailand, United States; 120 100 80 60 40 20 0 Billions of USD; 2010-2020* *annualized; Source: Trade Data Monitor LLC, January 7, 2021

In many cases, those exports are parts that are then assembled into finished goods, like phones and laptops, to send to the U.S. Vietnam is now the U.S.’s seventh biggest source of imports. U.S. imports of Vietnamese goods increased 17.1% year-on-year over the first 10 months of 2020. Shipments of electronics over that time increased 23.4% to $22 billion.

Vietnam has also become a big manufacturer and exporter of basic goods like garments and footwear. Chinese imports of footwear from Vietnam increased 15.8% to $2.7 billion in the first 11 months of 2020.

Like other manufacturing powers, Vietnam experienced shutdowns and slowdowns in 2020 because of the Covid-19 pandemic, including at plants owned by carmakers Honda, Toyota, Nissan and Ford.

But now business is humming again. The World Trade Organization has predicted a 7.2% rebound in global trade in 2021, a recovery in which Vietnam is now expected to play a major role.

Chinese Export Boom is Redrawing Global Economy

Buoyed by a rebounding economy as the U.S. and Europe continue to struggle with containing the coronavirus, China reported shipments of $268 billion, a stunning 21.1% increase from November 2019, almost twice the year-on-year gain in October. Analysts had predicted similar growth this past month.

China’s 2020 boom in exports is beyond a statistical blip, according to analysis by Trade Data Monitor, the world’s top source of export and import statistics. The country is now exporting more goods per month in dollar value than any country in global economic history.

The bonanza is driven by the Covid-19 pandemic. As hundreds of millions of people in the world’s richest economies migrate their work home from the office, they are doing so with China-made computers, phone, routers and data storage units. Overall, exports of high-tech products leapt 21.1% to $86.1 billion.

Hospitals, pharmaceutical companies and public health officials are buying medical equipment they need, such as ventilators, face masks, and now many key ingredients for mass-produced vaccines, from China. Exports of medical devices increased 38.4% to $1.6 billion.

As the rest of the world has had to shut down major sectors of the economy to cope with Covid-19, China has kept its factories open since the spring. China’s top customer: the U.S., which imported $52 billion of goods, up 45.7% from November 2019.

To be sure, China’s hot streak won’t last forever. Markets will get saturated. Countries will slow down their purchases of medical supplies as populations get vaccinated. The yuan has been appreciated in value for much of the decade. Chinese wages have been rising, pushing parts of the supply chains toward other Asian countries, especially Vietnam. China’s widening trade gap will continue to trigger protectionism and tariffs. And the rest of the world will get back to work.

But for now, China is the only rich economy expected to grow in 2020, according to the International Monetary Fund. China’s manufacturing index has been robust, indicating that factories are humming. By comparison, U.S. exports have fallen almost 15% in the first 10 months of 2020. Japan’s are down 11.7%.

Meanwhile, China has blown through all the records, notching its sixth straight month of growth. Thanks to exports, China now appears almost certain to reach its goal of becoming the world’s biggest economy by 2030 ahead of schedule.

The change in consumer habits isn’t just visible in sales of high-tech products. People are buying less stuff they need to move around—and simply more they need to stay at home. Shipments of bags and containers fell 8.3% to $2.1 billion, and shoes, boots and footwear declined 8.8% to $3.2 billion, while China exported $6.9 billion of furniture, up 42.7% from the same month in 2019.

In high-tech goods, China isn’t just exporting finished products. Sales to other countries of integrated circuits grew 26.4% to $11.5 billion.

Economists have looked to Chinese consumers to pick up some of the slackening demand, but imports are not keeping pace with exports. Imports increased 4.5% year-on-year in November, furthering widening China’s massive trade surplus with the rest of the world, to $75.4 billion, around double the number the year before, and up from $58.4 billion in October 2020.

The U.S. isn’t the only country ramping up imports of Chinese goods. Exports to the European Union increased 25.5% to $37.5 billion, shipments to India totaled $7.1 billion, up 20.2% from the same period in 2019, and exports to Latin America totaled $16.2 billion, up 29.3% from November 2019.