Published on 15.12.2011

China in Focus: New pockets of trade

The mild slowdown in China's export growth evident in recent months (growth slowed to an eight-month low of 15.9% over the year in October) is a trend that is set to continue given subdued demand from developed countries. The continuing growth of domestic Chinese markets means that trade will steadily become less important to the Chinese economy. However, these broad trends mask some interesting developments within China.

Some national policies are encouraging the set-up of export centres in new bases. Trade is expected to shrink as a proportion of total GDP in China on the whole, but in newer trading provinces like Chongqing, the trade surplus-to-GDP ratio is forecast to grow. As domestic consumption strengthens, several provinces running trade deficits will have the ratio of their trade deficits to GDP expand significantly as well, making them more vulnerable to shocks in import prices.

China continued to see double-digit growth in exports in September. The headline figure masks a shift at the regional level.

The rate of China's export growth is easing as demand in key markets softens, but there are no signs of a collapse akin to the one seen in 2009. In September, China continued to see double-digit growth in exports. The headline figure masks a shift at the regional level, however. National policies are encouraging the set-up of export centres in new bases. Trade is expected to shrink as a proportion of total GDP in China on the whole, but in newer trading provinces like Chongqing, the trade surplus-to-GDP ratio is forecast to grow. As domestic consumption strengthens, several provinces running trade deficits will have the ratio of their trade deficits to GDP expand significantly as well, making them more vulnerable to shocks in import prices.
Full article at EIU.com