CHINA Stop Export to US and EU: What next?

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Jul 1, 2024

For the first time, the emerging markets and developing countries now constitute 56.7% of China’s trade volume, surpassing traditional partners such as the US and Europe. For the first time, emerging markets and developing countries now constitute 56.7% of China’s trade volume, surpassing traditional partners such as the US and Europe. This shift marks a significant reorientation in China's trade strategy and economic relationships. Several factors contribute to this trend. Firstly, China's participation in the Regional Comprehensive Economic Partnership (RCEP) has deepened trade ties with countries in the Asia-Pacific region. In 2023, trade between China and the 14 other RCEP member countries reached $1.77 trillion, a 5.3% increase compared to the period before the agreement took effect in 2021. Furthermore, China's focus on Free Trade Agreements (FTAs) with countries aligned with its Belt and Road Initiative (BRI) has expanded its trade network to include 154 countries, predominantly in Asia, Africa, and Latin America. This network covered almost 40% of China’s exports, amounting to approximately $1.3 trillion in trade. The strategic shift towards emerging markets is also reflected in specific sectors. For instance, China has become the world’s largest car exporter, with a significant surge in automotive exports driven by markets like Russia. In 2023, China exported 840,000 vehicles to Russia alone, filling the gap left by European and Japanese manufacturers due to geopolitical tensions. The increasing integration of G20 emerging markets into global value chains has also played a crucial role. These markets have doubled their share of world trade and foreign direct investment since China's accession to the World Trade Organization in 2001. As these economies grow, they generate significant economic spillovers, influencing global trade patterns and enhancing their economic influence.
TRANSCRIPTS

For the First Time The emerging markets

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and developing countries now constitute

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56.7% of China's trade volume surpassing

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traditional Partners such as the US and

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Europe this shift marks a significant

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reorientation in China's trade strategy

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and economic relationships several

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factors contribute to this trend firstly

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China's participation in the regional

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comprehensive economic partnership or RP

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has deepened trade ties with countries

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in the asia-pacific region in 2023 trade

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between China and the 14 other rce

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member countries reached $ 1.77 trillion

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a 5.3% increase compared to the period

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before the agreement took effect in 2021

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furthermore China's focus on free trade

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agreements ftas with countries aligned

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with its belt and Road initiative BR has

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expanded its Trade Network to include

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154 countries predominantly in Asia

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Africa and Latin America this network

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covered almost 40% of China's export

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amounting to approximately $1.3 trillion

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in trade the Strategic shift towards

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Emerging Markets is also reflected in

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specific sectors for instance China has

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become the world's largest car exporter

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with a significant surge in automotive

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exports driven by markets like Russia in

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2023 China exported 840,000 vehicles to

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Russia alone filling the Gap left by

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European and Japanese manufacturers due

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to geopolitical tensions the increasing

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integration of G20 Emerging Markets into

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Global value chains has also played a

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crucial role these markets have doubled

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their share of World Trade and foreign

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direct investment since China's

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accession to the World Trade

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Organization in 2001 as these economies

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grow they generate significant economic

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spillovers influencing global trade

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patterns and enhancing their economic

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influence China's trade with bricks

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countries Brazil Russia India and South

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Africa has seen substantial growth in

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recent years reflecting a strategic

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shift in its trade policies in the first

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quarter of 2024 China's trade with these

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nations hit 1.49 trillion y

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approximately $9.7 billion marking an

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11.3% increase year on-year this trade

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volume accounted for 14.7% of China's

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total foreign trade during the same

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period in the first 7 months of 2023

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trade between China and other bricks

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countries soared by

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19.1% year-on-year year to 2.38 trillion

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W

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326.50 billion accounting for

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10.1% of China's total foreign trade

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value exports to these countries reached

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1.23 trillion W showing a

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23.9% increase while Imports were at

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1.15 trillion Yan growing

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14.3% China's trade volume with the

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newly inducted brics members Iran the

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United Arab Emirates UAE Saudi Arabia

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Egypt and Ethiopia reflects an important

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strategic expansion for both China and

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the brics block let's take a quick pause

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appreciate it your engagement helps us

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grow thank you China has a robust trade

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relationship with Iran primarily

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involving Energy Products this includes

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significant Imports of crude oil from

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Iran which is critical for China's

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energy needs the economic ties between

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the two countries have grown despite

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International sanctions on Iran with

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China providing a crucial market for

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Iranian exports the UAE is a significant

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trade partner for China in the Middle

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East the trade relationship encompasses

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a wide range of sectors including energy

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technology and infrastructure China is a

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major supplier of consumer goods to the

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UAE while the UAE exports petroleum and

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petrochemical products to China as one

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of the world's largest oil producers

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Saudi Arabia is a Key Energy partner for

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China the bilateral trade largely

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revolves around crude oil exports from

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Saudi Arabia to China which forms a

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substantial part of China's energy

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Imports this relationship is poised to

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grow further with Saudi Arabia's

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inclusion in bricks providing a more

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structured framework for economic

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cooperation Egypt is strategically

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important to China due to its location

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and its role as a gateway to African

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markets the bil Al trade includes

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significant Chinese investments in

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Egyptian infrastructure projects as well

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as exports of machinery and electronics

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from China to Egypt trade between China

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and Ethiopia is characterized by Chinese

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investments in infrastructure including

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Railways and industrial parks Ethiopia

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exports agricultural products to China

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while importing a wide range of goods

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including Machinery electronics and

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textiles from China the Strategic

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expansion of bricks to include these new

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members is seen as a move to diversify

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and deepen economic ties offering a

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collective Market with a combined GDP

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that significantly enhances the Block's

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global economic influence the Strategic

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expansion of bricks to include these new

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members is seen as a move to diversify

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and deepen economic ties offering a

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collective Market with a combined GDP

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that significantly enhances the Block's

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global economic influence China saw a

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significant increase in the export of

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electromechanical products to Bricks

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countries with exports surging by 38%

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year on-year to

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79.4 billion un notably exports of

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lithium batteries and electric passenger

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vehicles grew by

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129.5 and

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61.3% respectively China's private

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companies have been expanding into

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bricks markets rapidly with their trade

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volume reaching 1.36 trillion y in the

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first 7 months of 2023 representing a

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29.4% increase the trade between China

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and other bricks countries is highly

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complimentary involving the exchange of

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mechanical and electronic products labor

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intensive Goods energy agricultural

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products and metal ore in the first

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quarter of 2024 the trade between the EU

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and China experienced some changes

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compared to the previous years imports

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from China saw a decline of 17.8% in

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2023 compared to the previous year

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reflecting a reduction in trade volume

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despite this China maintains its

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position as the largest supplier of

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goods to the EU accounting for 20.5% of

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total extra EU Imports the most imported

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goods from China included

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telecommunications equipment electrical

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machinery and automatic data processing

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machines on the export side the eu's

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exports to China slightly decreased by

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0.3 percentage points in the first

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quarter of 2024 compared to the same

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period in 2023 the primary exports from

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the EU to China included machinery and

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Vehicles chemicals and various

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manufactured goods notably Motor

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Vehicles remained the top exported

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product although there was a decrease in

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exports compared to the previous year in

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2023 the eu's trade deficit with China

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stood at 291 billion EUR which was a

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significant reduction of 106 billion EUR

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compared to 2022 this decrease in

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deficit highlights a shift towards a

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more balanced trade relationship however

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the overall trade volume between the EU

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and China remain remain substantial with

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China being a critical partner in the

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eu's trade landscape the EU rely heavily

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on China for several critical sectors

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especially those involving key raw

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materials and Technologies here's an

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overview of the main areas of dependence

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the EU relies heavily on China for its

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supply of heavy Rare Earth elements Rees

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crucial for the production of high-tech

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and green technologies including

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electric vehicles and renewable energy

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components China supplies 98 to 100% of

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the eu's heavy Rees which are vital for

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manufacturing permanent magnets used in

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wind turbines and electric vehicles this

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dependency is problematic given the

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Strategic importance of these elements

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in the eu's transition to a green

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economy and its efforts to reduce carbon

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emissions the EU Imports almost all its

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supply of several critical minerals from

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China including bismuth germanium

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hafnium magnesium and tantalum these

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minerals are essential for various

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high-tech applications including

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semiconductors Aerospace and defense

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Technologies for instance China provides

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86% of the world's Rare Earth Supply and

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is the leading producer of many other

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critical minerals this dependency poses

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significant risks for the eu's

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industrial value chains and strategic

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sectors China dominates the global

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supply chain for solar panels

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controlling 80 to 90% of certain parts

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of the production process this includes

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the manufacturing of solar cells and

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modules which are essential for the eu's

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renewable energy targets China's

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dominance in this sector is attributed

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to its large-scale production

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capabilities and significant investments

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in solar technology enabling it to

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produce solar panels more

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cost-effectively than other countries

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this Reliance on Chinese manufactured

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solar components is a critical aspect of

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the eu's renewable energy strategy

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highlighting the need for

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diversification and increased domestic

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production capacity despite ongoing

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tensions the US continues to rely

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heavily on China for several critical

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sectors including electric vehicle

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batteries solar cells and semiconductors

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the US relies heavily on China for more

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than 80% of specific segments of the

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electric vehicle EV battery supply chain

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especially in the areas of mining

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processing and refining critical

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minerals like lithium Cobalt and

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graphite this dependency is significant

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because these minerals are crucial for

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manufacturing EV batteries a key

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component of the growing clean energy

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sector China's dominance in this supply

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chain is notable it produces 3/4 of all

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lithium ion batteries globally and holds

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70% of the production capacity for

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cathodes and 85% for anodes both

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essential components of EV batteries

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additionally over half of the global

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capacity for processing and refining

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lithium Cobalt and graphite is located

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in China to address this dependency the

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US has implemented several legislative

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measures aimed at strengthening its

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domestic Supply chains despite these

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measures China's influence fluence

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remains strong Chinese companies

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continue to invest heavily in overseas

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facilities to circumvent us restrictions

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and leverage free trade agreements

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further embedding their role in the

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global supply chain for example Goan

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high-tech and contemporary amperex

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technology company satl have made

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substantial investments in new battery

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plants in locations like Illinois and

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Morocco enhancing their Global footprint

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similar to the European Union the United

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States is heavily dependent on China for

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solar cells

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this Reliance is significant because

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China dominates over 80% of the global

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supply chain for solar components

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including polysilicon Wafers and cells

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this dependency has raised concerns

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about National Security and supply chain

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vulnerabilities particularly given

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geopolitical tensions and trade disputes

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in 2023 China exported 114 gaw GW of

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solar panels worldwide in the first half

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of the Year alone a 34% increase from

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the previous year this surge reflect

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China's dominant position in the global

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market where it accounts for 80% of the

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manufacturing capacity for solar panels

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most of these exports went to Europe but

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a significant portion also reached the

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United States the US is also dependent

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on China for semiconductors and other

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critical Technologies used in a wide

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array of industries from consumer

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electronics to defense systems China

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dominates the supply of key

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semiconductor materials like gallium

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which is essential for advanced

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semiconductors used in defense

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application a telecommunications and

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electric vehicles in 2022 China supplied

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98% of unprocessed Gallum globally

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illustrating its critical role in the

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semiconductor supply chain China's

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semiconductor strategy has led to a

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significant increase in the production

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of Legacy

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semiconductors by 2027 China's share of

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global Legacy chip production is

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projected to reach 39% up from 31% in

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2023 this has positioned China as a

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dominant player in the market for these

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older yet still widely used chips

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creating potential vulnerabilities for

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the US and its allies if China were to

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use this leverage for economic or

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strategic Advantage moreover the US

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semi-conductor Supply chains Reliance on

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China extends to various critical

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minerals necessary for chip production

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such as germanium and arsenic which are

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also heavily controlled by China this

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dependency poses a significant risk

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especially if geopolitical tensions were

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to lead China to restrict exports of

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these vital materials that's all for

13:06

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