View 40 Years of Booming Exports
Animated graphic: 40 years of booming exports in China
China has the second highest GDP in the world and it exports 15% of all the goods in the world. But how did this happen?
Just 40 years ago, the Chinese economy was in a totally different situation, accounting for less than 1% of global exports and still in the early stages of building its economy. The above animated graphic from UNCTAD shows China’s rise to dominance in global trade over time.
Timeline: the rise
China in the mid-twentieth century is remarkably different from that of the modern nation. Prior to the 1980s, China was going through a period of social upheaval, poverty and dictatorship under Mao Zedong.
From the late 1970s, China’s share of world exports was less than 1%. The country had few commercial centers and little industry. In 1979, for example, Shenzhen was a city of about 30,000 people.
In fact, China (excluding Taiwan* and Hong Kong) did not even appear in the top 10 world exporters until 1997, when it reached a 3.3% share of world exports.
|Year||Share of world exports||Rank|
*Editor’s note: The data above comes from the UN, which classifies Taiwan as a separate region from China for political reasons.
In the 1980s, several cities and regions, such as the Pearl River Delta, were designated as special economic zones. These SEZs benefited from tax incentives which served to attract foreign investment.
Additionally, in 1989, the Coastal Development Strategy was implemented to use the strategic regions along the country’s coast as catalysts for economic development.
The 1990s and after
In the 1990s, the world saw the rise of global value chains and transnational production chains, with China providing a cheap manufacturing hub due to low labor costs.
In the late 1990s, the Western Development Strategy was implemented in 1999, known as the “Opening the West” program. This program aimed to strengthen infrastructure and education to retain talent in the Chinese economy, with the aim of attracting new foreign investment.
Finally, China officially joined the World Trade Organization in 2001, which allowed the country to move forward at full steam.
Made in China
Today, China is a trade giant and a manufacturing giant. Only the United States and Germany come close to their share of world exports, at 8.1% and 7.8% respectively.
|Rank||Country||Share of world exports (2020)|
|#6||🇭🇰 Hong Kong SAR||3.1%|
|#seven||🇰🇷 South Korea||2.9%|
China’s manufacturing industry has become dominant in the production of just about anything, from common household items to integral parts for automotive manufacturing. Some staples of Chinese manufacturing are:
- Precision instruments
- Industrial machines for computers and smartphones
COVID-19 has made China’s integral role in the global economy even more visceral, as significant supply chain delays occurred when the virus hit the country.
An economic superpower
In 2021, China’s trade recovery from the crisis has surpassed most other countries – in the first quarter of 2021, its exports increased by almost 50% compared to the year-ago quarter, about $710 billion.
And the country isn’t slowing down anytime soon. Other economic development plans are on track, such as Made in China 2025, with the aim of becoming a dominant player in global high-tech manufacturing. Additionally, the famous One Belt, One Road initiative has funded infrastructure projects around the world for the past decade, and the country is also a founding member of RCEP, which will soon become the largest trading bloc in the world.
However, China still faces a series of challenges, such as:
- Demographic decline
- The advent of labor-saving technology
- Trade wars with the United States and sanctions from other trading partners, such as Europe
- The rise of ASEAN trading powers, such as Vietnam
A declining population has many implications, such as a shrinking labor force and domestic market. Additionally, many companies are moving to less expensive manufacturing hubs like Vietnam.
Additionally, low-cost innovations in labor-saving technologies, such as robotics and automation, have already begun to undermine the cheap manual labor that has made China the global manufacturer. .
All of these and more could potentially mean a slowdown in the growth of Chinese export dominance. However, while China’s future may not be certain, global trade and production could not function without it.