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The Future of Chinese Trade

by Euro Exim Bank
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The face of trade in China is changing. External demand is subdued and, in some cases, declining. Demographics are shifting and the global geopolitical environment is in flux. It is easy to chalk all of this down to the global pandemic. However, a closer analysis reveals how all of this is more a natural result of China’s growth than due to external factors.

In this article, we will take a brief overview of China’s present trade environment and examine the shifts that are occurring. Import and export businesses are paying increased attention to these movements as the changing face of trade in China is expected to bring more opportunities for international trade than ever before.

Changing Demographics, Transforming Economy

Since the late 1970s, China has been undergoing a massive economic boom, steadily posting robust trade and economic growth figures. The seemingly unlimited supply of cheap labour and natural resources saw the country develop into one of the world’s great powers. However, China’s labour supply peaked in 2012 and has been stagnant since. Furthermore, Chinese labour, while still cheap, is no longer as cheap as it once was.

An ageing population has fundamentally altered supply and demand patterns. To illustrate, 15 million Chinese enter the labour force each year, on average. In 2000, only about 1 million of that number went to university, leaving 14 million to enter the workforce right away. Today, its closer to 7 million going to university. This is resulting in changes in the labour market too, with firms finding it difficult to retain talent and graduates often finding it difficult to get jobs.

However, this has resulted in an ever expanding middle-class and more affluent Chinese, which has created a huge market for Chinese goods and services within China itself. Furthermore, it has created a major market for imported goods as well. In fact, China’s economic recovery has been partly fuelled by a huge surge in imports, which grew at an unprecedented rate last year.

China’s ability to invest in new technologies is also making it a prime destination for companies setting up R&D facilities. In the future, we can expect to see huge innovation coming out of China, along with much more sophisticated industries being attracted to set up shop there.

Geopolitical Transformation

As the pandemic unfolds, international trade rules are being rewritten. New alliances and partnerships are being formed, such as the Trans Pacific Partnership and the Regional Comprehensive Economic Partnership (RCEP). While the WTO remains the primary multilateral trade body, international trade is taking on a decidedly more “regional tone” as opposed to a global one.

Facilitating International Trade

At Euro Exim Bank, we specialize in international trade finance and settlement. We provide customers across the world with paper-based and digital trade finance services. Our customers also enjoy 24/7 instant access to our proprietary Exim Wave multicurrency global settlements platform, which enables access to over 150 currencies. With a focus on SMEs in emerging and frontier markets, we are ensuring that import and export businesses of all sizes can access trade finance and participate in international trade.

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