Uwe Hoering, November 2021
China’s authorities report soaring foreign trade figures, despite of the on-going Corona pandemic. A further shift towards the BRI countries is emerging, a trend that plays into the narrative of the ‘Dual Circulation Strategy’ announced this summer. This “new development model” intends, on the one hand, to further enhance the internal economy, while ‘external circulation’ refers to further integration into the global economy through foreign trade and investments.
In the spring of 2020, the Chinese national government announced the Dual Circulation Strategy. It aims firstly to strengthen the domestic economy and thus “resilience against external shocks”. The promotion of ‘internal circulation’ involves, among other things, demand stimulation and technological modernisation. External circulation’ refers to further integration into economic globalisation through exports, imports and investment, with particular emphasis on the BRI. Promoted personally by Xi Jinping’s announcement that this ‘dual circulation’ will “gradually form a new development model” (quoted in South China Morning Post, November 19, 2020), it occupies a central role in the 14th Five-Year Plan 2021-2025. Details, however, are only beginning to emerge.
Growth in foreign trade …
While the ‘internal circulation’ is presently slowed down by massive regulatory interventions, the turbulences surrounding real estate companies like Evergrande and the difficulties in the energy sector, foreign trade and investments are reported to be growing, in some cases at a remarkable rate. This is despite the trade conflicts with Australia and the USA and discussions about ‘de-coupling’ global value chains:
According to data from the General Administration of Customs, evaluated by the South China Morning Post (November 7, 2021), China’s exports in October rose 27.1 per cent from a year ago to $300 billion, just marginally less than in the previous month. Its imports increased by 20.6 per cent to $215.7 billion, bringing China’s foreign trade surplus to over $84 billion.
Bilateral trade with the adversaries USA and Australia also recorded an increase in 2021, albeit at a lower rate, as did trade with Europe, to which the easing of the Corona pandemic contributed considerably. German shipments to China, mainly capital goods and vehicles, jumped by nearly a third to $70 billion in the first seven months of this year.
…. particularly with BRI countries
As reported by the pro-government Global Times, also citing the customs authority, there has been a strong improvement in the trade with BRI countries: China’s exports to these countries rose in the first seven months of 2021 to $551 billion, an increase of 25 per cent compared to the same period last year, as did imports. A significant share of these imports are oil and natural gas, minerals and metals, for instance from Central Asia, Russia and Africa.
Special attention is given to the neighbouring countries to the South: the value of goods procured by the members of the Southeast Asian Community ASEAN increased by 23.6 per cent. At the same time, their exports to China rose by 37 per cent to $216 billion. These were primarily processed products such as electrical appliances, plastic products and vehicles. The numerous bilateral trade agreements (FTAs) and especially the conclusion of the regional economic agreement RCEP, which may come into force at the beginning of 2022, inspire hope for more to come.
The attractiveness of cooperation within the framework of BRI for foreign trade would also become apparent in Europe, believes the consulting firm Dezan Shira & Associates, which provides potential investors for China and Belt&Road projects among other things with a regular Silk Road Briefing. As evidence of this, she points to the 63 per cent increase in Italian exports to China to $18 billion in the first seven months of 2021. Italy is the only Western European country to have joined the initiative so far. Likewise, many Eastern European countries, which are being specifically courted by Beijing economically and politically, would show high growth rates in trade with China.
Investments from BRI countries also going up
The consulting company Dezan Shira is also seeing a growing importance of investments from BRI countries in China: According to a report, their share of foreign direct investment rose by 58.2 per cent in the first quarter of 2021, and by 60 per cent for companies from ASEAN countries. The consulting company identifies some of the reasons for this in the more than 100 bilateral investment treaties (BITs) that China has concluded in recent years.
Direct investment from the EU, on the other hand, increased by only seven per cent over the same period, albeit from a much higher baseline. This might show the first signs of a “political de-coupling”.
Figures, figures, figures
The question is to what extent these figures are the product of wishful thinking or of a distortion of the statistics. Their informative value is certainly limited and possibly influenced by interests.
For one thing, they are only snapshots from a lower baseline due to Corona. Also they may be deliberately doctored. And the consultancy Dezan Shira is occupationally prone to excessive optimism: “The current FDI environment in China is the best it has ever been” (Silk Road Briefing, April 20, 2021).
Nevertheless, they are revealing too: They point to a trend that South-South cooperation, and especially integration in Asia, is becoming more intense. China would thus be able to reap the dividends of infrastructure development, which is to be pushed further, and intensive wooing through BRI.
In parallel, there are indications that this intensification of economic relations is at the expense of Western industrialised countries and that ‘de-coupling’ is being pushed by both sides.
And the figures play into the hands of the narrative of the Dual Circulation Strategy and make it more fleshed out: They paint a picture of a successful two-track development approach in which domestic and foreign markets of participating countries mutually boost each other – a so-called Win-win situation.
Translated with www.DeepL.com/Translator (free version)